10 July 2018
Non-banking financial companies (NBFCs) today are playing a large role in meeting the financial needs of businesses and individuals who have traditionally remained un-served or underserved by the banks. Couple of years back these NBFCs would have been considered as fools to dabble in such unchartered territory where banks used to avoid or neglect.
Banking with underserved was considered to be unsafe. But today the same unbanked and underserved is seen as huge potential for business. All thanks the digital transformation that has seen NBFCs using tools like Artificial Intelligence (AI), Big Data analytics and algorithms to serve their customers, both existing and new segments, much quickly and with lesser hassles and delinquency.
Most NBFCs have automated at least the first leg of loan origination and customer on-boarding. Loan requests are being registered through online and digital platforms of lenders. Traditionally, the process of filling up a bank loan form and waiting for approval would entail a long waiting time. Use of technology has enabled the customer to complete the process online within minutes from their computers and on-the-go from their handheld devices. Aadhaar data enables instant e-KYC or digital verification of customers.
The credit underwriting process, which required an army of people to pour over tonnes of paperwork, has become technology driven. NBFCs are relying on advancements in Artificial Intelligence (AI), Big Data Analysis, Internet of Things (IoT) and Algorithms for alternate credit scoring methods. Social media presence on Facebook, Twitter and WhatsApp etc. and online behavioural patterns is being used to get unique customer insights, psychometric scoring and predictive analysis for possible default.
AI is also being used for fraud detection and loan disbursements to new customer segments. Mobile and smartphone revolution has enabled the front-end connectivity with customers with even low-incomes and no or little education to use their device for applying for loans, checking loan status, completing e-verification, and signing off digital documents for disbursements.
While technology has enabled NBFCs to play a big large role in meeting the financial needs of businesses and individuals who have traditionally remained un-served or underserved by the banks, yet, the approach has been non-uniform for most players when it comes to ensuring the complete digitisation of the entire lending stack.
Says Devang Mody, Executive Director & CEO, Reliance Money, “The future of NBFCs lies in having originate-to distribute (OTD) business models with a fully integrated back-end, middleware and front-end services for making the entire lending stack technology-driven. This doesn’t simply end at automating the loan origination to loan disbursal processes, but also adopting solutions that would enable companies to quickly react to business events, market and customer demands and have a robust back-end platform that could quickly be adapted and scale up to offer dynamic credit products.”
Reliance Money has entered into several tie-ups with global technology companies to digitise and automate their entire lending stack – right from customer on-boarding to credit underwriting, decision making, loan disbursals and instant customisation of loan products. With end-to-end digitisation, we are in a time when use of technology is deciding whether a person gets a loan and how much is his eligibility.
“Technology has become hygiene, and one has no choice but to adopt to stay relevant in the game,” says Mody who adds, “Technological innovations has been enabling NBFCs to optimize their workforce and workflows, enhance turnaround time, enable educated and smarter decision-making and ensure availability of credit for new customer segments at the best possible rates. Most important it’s also the demand from the consumers.”