NBFCs – The emerging leaders in technology innovations

Nikhil Bandi

Nikhil BandiWith changing times, Vistaar is continuously innovating to ensure that appropriate products are offered to the underserved small business community. Its financial offering includes unsecured as well as secured loans based on the business type and financial need, says Nikhil Bandi, Senior Vice President and Chief Information Officer at Vistaar Financial Services, in conversation with Elets News Network (ENN).

How is Vistaar creating new economic opportunities for small businesses in India?

Vistaar is one of the pioneers in lending to micro, small and medium sized businesses. The vision of company is to serve the financial needs of the “underserved” small business community of country.

Vistaar has set a strong and stable foothold in catering to the credit needs of the MSME businesses over the last eight years. The demand for credit in the MSME segment has a very broad spectrum and it varies from few thousands to tens of lakhs. A large portion of this segment is still underserved. With changing times, Vistaar is continuously innovating to ensure that appropriate products are offered to the this small business community. Vistaar’s financial offering includes unsecured as well as secured loans based on the business type and financial need. As Digital India is moving from a dream towards a reality, Vistaar’s loan products are also continuously evolving where a loan can be provided to a small business based on its electronic payment receivable’s history and the years in business. Vistaar provides financial services to the missing middle business segment such as small manufacturing units, textiles/ power / auto looms, home-based enterprises, services (hotel, bakery, garages, workshops etc.), general stores and various kinds of shops, etc.

The total unmet demand in the Micro, Small and Medium Enterprises (MSMEs) is close to Rs 2.9 trillion. What role is Vistaar playing in bridging this gap?

With a clear focus towards micro, small and medium enterprise loan products offering, this is the only segment Vistaar caters to and would continue to cater to. As a company our vision, mission and principles are focused towards the financial inclusion of small business. Vistaar, through its unique credit underwriting model, has proved that MSMEs, which are unserved, can be effectively given loans. This has paved the way for many players to enter this segment and start lending to MSMEs. Our product innovation team focuses towards changing needs to small businesses in India. As the gap is still huge, we are adding products and technologies that make lending faster and easier to right customers by understanding their asset creation, electronic payment history and provide loans a few times faster than typical secured business loan. With the product mix offered by Vistaar, we would certainly be a catalyst to the financial inclusion of small business in India.

How Vistaar’s services are empowering women in the MSME sector?

Micro enterprises are generally family owned and family-run businesses. Women play an important role in running these businesses. By extending credit to such enterprises, Vistaar is empowering women, both socially and economically. Certain small ticket size products of Vistaar focused towards women enterprises where women have to be the main applicant.

Banking, Financial Services and Insurance (BFSI) sector is transforming due to technology. What are the new technologies used by Non-Banking Financial Companies (NBFCs)?

NBFCs in India are adopting latest technology innovations much faster, even faster than many banks and insurance companies. Some of the innovations where NBFCs have embraced technology as early movers are:

  1. Lending based on financial score cards of customers which is a combination of parameters like bureau scores, customer’s business sector, demography and other aspects related to its business growth trajectory in last few years and potential to expand. This establishes need of business expansion and reflects customer’s ability to service the loan.
  2. Using Build Operate Transfers (BOTs) for interactions with prospects and customers for self-onboarding of customer, customer servicing and employee related services. These BOTs have now vernacular capabilities where acceptance of technology has become very easy even in rural and semi-urban India. The Natural Language processing capabilities in combination with vernacular capabilities have made the process much easier and cost effective. With this, NBFCs can reduce on their operating cost and pass the benefits to the end customers. This technology will not replace the mobile revolution but would enable it further by making some of the mobile apps redundant and mobile platform much stronger and simpler.
  3. Lending based on psychometric assessment of customer: Many times it is observed that customer has the capacity to service the loan but intentions are doubtful. Online psychometric assessments of customer are used by NBFCs now to assess the intention of customer to service the loan. This is a good scientific tool to help making fast and objective credit decision.
  4. Aadhaar-based KYC, Paymentshttps://en.wikipedia.org/wiki/Know_your_customer, E-NACH, E-Sign are adopted by NBFCs much faster than many other sectors. NBFCs adoption to these technologies has paved the path for a very fast growth in the MSME sector through faster loan processing of deserving businesses.

All these technologies in-combination would certainly revolutionise the NBFC industry in terms of portfolio quality, speed to process loan and business volume growth. While there are many other technology revolutions like Blockchain, Internet of Things (IoT), etc. which over the period of next three to five years change the avatar of how NBFCs would do business, there are very limited use cases in NBFC space today.

Vistaar primarily works for MSMEs. How challenging is it for your brand to uplift the level of tech-awareness in the sector?

With the adoption of technology across sectors it’s not going to be difficult for Vistaar or any other company to bring tech awareness in the sector. What’s more difficult is to make customer aware of what they should not do. With financial data, behaviour data and social data of customers, the profile of customers would always be available for Vistaar and other similar technology sensitive companies. It’s important to educate the MSME customers to have clean records of their business in future to have an easy access to finance. Vistaar with its initiatives around “Digital Office” (i.e. Assisted tab based onboarding) and Vernacular BOT (Self onboarding based on natural language communication BOTs), would lead the path of tech awareness and adaptability in MSME space.

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