APAC - build­ing a best-in-class fi­nan­cial ser­vices

It is a new age NBFC with the DNA of a fin­tech

Banking Frontiers - - Highlights - Mo­han@bank­ingfron­tiers.com

Imag­ine a fi­nan­cial ser­vices com­pany, which sees a highly com­pelling op­por­tu­nity to de­liver bet­ter out­comes for un­der­served cus­tomers and busi­nesses by lever­ag­ing dig­i­tal tech­nolo­gies and data in com­bi­na­tion with best-in-class ex­e­cu­tion and risk man­age­ment! That is what APAC Fi­nan­cial Ser­vices, founded by Gu­nit Chadha, ex CEO of Deutsche Bank Asi­aPa­cific, is all about.

The lean or­ga­ni­za­tion be­ing built re­lies on the rapid in­no­va­tions in dig­i­tal tech­nolo­gies and data pro­lif­er­a­tion to gen­er­ate su­pe­rior out­comes in fi­nan­cial ser­vices. The man man­ag­ing dig­i­tal and tech­nol­ogy is San­jay Sharma, a 25-year vet­eran in bank­ing tech­nol­ogy, who is now chief dig­i­tal & in­no­va­tion of­fi­cer at APAC Fi­nan­cial Ser­vices. Prior to APAC, he was head­ing tech­nol­ogy and in­no­va­tion func­tions at RBL Bank and IDBI Bank.

“The main thought that pre­vailed our de­ci­sions when we started con­cep­tu­al­iz­ing a tech­nol­ogy plat­form for us was that we are not a tech­nol­ogy com­pany and should not build a tech­nol­ogy in­fra­struc­ture from the ground zero. In­stead we should lever­age the ex­ist­ing tech­nol­ogy part­ner ecosys­tem. This re­ally worked well for us and we could roll out an en­tire lend­ing sys­tem in about 8 weeks in col­lab­o­ra­tion with part­ners.” says Sharma.


He says the un­der­ly­ing aim was to cre­ate a very lean or­ga­ni­za­tion re­ly­ing heav­ily on tech­nol­ogy. “When we be­gan our jour­ney, ob­jec­tive was to build a lean, as­set lite, ag­ile and cloud em­pow­ered tech­nol­ogy plat­form which does not re­quire up­front cap­i­tal in­vest­ment. Idea was not to over­spend at the be­gin­ning but build an in­fra­struc­ture that can scale up with our busi­ness growth. Dur­ing the ini­tial days, you don’t need a big team to man­age tech­nol­ogy and dig­i­tal ini­tia­tives and so I just man­age it with our part­ners and busi­ness user teams. You need to ap­ply lean and part­ner­ship prin­ci­ples in ev­ery­thing you do!” ex­plains Sharma.

The com­pany has al­ready launched its re­tail mort­gages and SME lend­ing ver­ti­cals. It is about to in­tro­duce MSME lend­ing in the near fu­ture. Fi­nal aim is to build a mul­ti­plat­form fi­nan­cial ser­vices firm that serves any mar­ket where it feels it can de­liver su­pe­rior out­comes through com­bin­ing dig­i­tal tech­nolo­gies with best-in-class ex­e­cu­tion / risk man­age­ment. One of the prime propo­si­tions is af­ford­able hous­ing loans to the un­der-banked/un­banked seg­ment of the pop­u­la­tion who may have the in­come to ser­vice loans but lack the doc­u­men­ta­tion that tra­di­tional bank­ing chan­nels re­quire for credit un­der­writ­ing and risk as­sess­ment.


Sharma says “Un­like in other en­ter­prises where it takes months to roll out a tech­nol­ogy plat­form, our tab en­abled mo­bil­ity plat­form with an in­te­grated loan orig­i­na­tion, loan man­age­ment and col­lec­tion sys­tem was im­ple­mented in a short span of 10 weeks. Suc­cess key was not to ov­erengi­neer the pro­cesses and very lit­tle rel­e­vant and mean­ing­ful cus­tomiza­tion.”

Sharma claims it is one of the quick­est im­ple­men­ta­tions of build­ing a dig­i­tal plat­form in the fi­nan­cial ser­vices space, espe­cially in the home loan seg­ment. APAC has a tech­nol­ogy plat­form to on­board cus­tomers us­ing tab, ini­ti­ate on-line credit scores ver­i­fi­ca­tion from bu­reaus, de­sign cus­tom­ized credit un­der­writ­ing mod­els and same has been hosted on cloud with­out any sub­stan­tial tech­nol­ogy as­set within the com­pany. It has also en­sured that pay­outs to tech­nol­ogy part­ners are linked to its busi­ness growth rather than fixed up­front cost.

“We wanted to keep the em­ployee ex­pe­ri­ence very sim­ple so that their com­mu­ni­ca­tion with our tar­get cus­tomers is crisp and clear. Strat­egy was to de­sign a sim­ple light lend­ing ap­pli­ca­tion which is ac­ces­si­ble through a mo­bile or can be ac­cessed on a lap­top us­ing mo­bile hotspots,” says Sharma.


He also points out that sim­ple cus­tom­ized tools are re­quired for re­la­tion­ship of­fi­cers to en­able them to cap­ture a lead while talk­ing to the clients us­ing the tab. It is im­por­tant that the re­la­tion­ship of­fi­cer could record the ba­sic de­tails into the LOS from any lo­ca­tion. This is re­quired so that loan pro­cess­ing can be done faster and in a seam­less man­ner.

What dif­fer­en­ti­ates af­ford­able home loan from a con­sumer loan is that in for­mer there is a need for de­tailed doc­u­men­ta­tion, ver­i­fi­ca­tion of doc­u­ments, prop­erty val­u­a­tion and le­gal as­sess­ment, all of which need time to com­plete and so it is dif­fi­cult to achieve the ser­vice level TATs of con­sumer loan process. What APAC is try­ing to do

is to give an in-prin­ci­ple ap­proval in few hours and the fi­nal sanc­tion and dis­bur­sal within a week.

“No doubt, all these have to be done very quickly. The time taken to process and sanc­tion a home loan at this mo­ment varies de­pend­ing on the cus­tomer pro­file. How­ever, our tar­get would be to dis­burse the loan in a week’s time,” says Sharma.


What hap­pens when a per­son does not have a bureau score?

Re­sponds Sharma: “We are es­sen­tially tar­get­ing ‘the new to credit’ seg­ment. The bureau score is a chal­lenge for this seg­ment. Sec­ondly, this seg­ment may not have doc­u­mented in­come as much of their trans­ac­tions would be in cash. It is there­fore very im­por­tant for us to do a per­sonal dis­cus­sion and as­cer­tain the pay­ment ca­pac­ity of the cus­tomer, his credit wor­thi­ness, etc. We have cre­ated a pre-de­fined ques­tion­naire forw credit as­sess­ment. De­pend­ing on the in­puts we get, we de­cide whether the cus­tomer is el­i­gi­ble for the loan. Go­ing for­ward, we will build a pre­dic­tive an­a­lyt­i­cal model around the data cap­tured dur­ing the per­sonal dis­cus­sions us­ing AI and ML to as­cer­tain the credit wor­thi­ness of the cus­tomers. So, by the time the per­sonal dis­cus­sion with a po­ten­tial cus­tomer is over, we should be able to con­vey our de­ci­sion on the el­i­gi­bil­ity of the cus­tomer.”

In this re­gard, the com­pany is also ex­plor­ing al­ter­na­tives to bureau scores. It has been in dis­cus­sions with a startup to cre­ate a psy­cho­me­t­ric model whereby it can an­a­lyze and as­sess an ap­pli­cant. Sharma says the ob­jec­tive is to un­der­stand the ap­pli­cant’s abil­ity to pay and also his in­tent to pay. The psy­cho­me­t­ric tests can give in­sights on these as­pects.

On part­ner­ship, Sharma says: “I firmly be­lieve that in to­day’s net­worked world, while set­ting up a new busi­ness, one should not try to cre­ate / build ev­ery­thing in-house but should lever­age the strengths of ex­ist­ing part­ners. There is no point in cre­at­ing a big dis­tri­bu­tion net­work or de­velop en­tire tech­nol­ogy stack or set up big pro­cess­ing hubs when you can lever­age the strength of ex­ist­ing play­ers in the space. “


He goes on to add: “APAC be­lieves that one needs to have a per­fect bal­ance be­tween phys­i­cal and dig­i­tal mod­els for ex­tend­ing prod­ucts and ser­vices to the clients. It is im­por­tant to build a dis­tri­bu­tion net­work, which is dig­i­tally em­pow­ered. Ac­cord­ingly, we have opened 2 branches - one in Kalyan and an­other in Vi­rar - to have a deep un­der­stand­ing of the af­ford­able mar­ket and cus­tomer seg­ment. How­ever, our mar­ket is not ex­actly in these two lo­ca­tions, but in the ar­eas within the ra­dius of 30-40 kms. At the mo­ment, these branches are reach­ing to po­ten­tial cus­tomers and builders to un­der­stand their needs and the mar­ket po­ten­tial and these have also sourced sub­stan­tial busi­ness. We will of course roll out branches in other places, espe­cially in tier 3 and 4 towns.”


The other seg­ment APAC is tar­get­ing is SMEs. APAC’s whole­sale & com­mer­cial fi­nance ver­ti­cal pro­vides fully col­lat­er­al­ized loans to SMEs and their pro­mot­ers. These are typ­i­cally highly cus­tom­ized so­lu­tions that tra­di­tional bank­ing providers can­not match due to lack of busi­ness flex­i­bil­ity.

On build­ing the dig­i­tal model, Sharma says: “We are try­ing to build mod­els us­ing re­ceiv­ables / sales data avail­able with the GST Net­work, fi­nan­cial data from ITR, com­pany in­for­ma­tion avail­able with the min­istry of com­pany af­fairs or reg­is­trar of com­pa­nies and few more data sources. The idea is to use the open APIs or con­sent frame­work to ex­tract data and build in­tel­li­gence around it and process and sanc­tion SME loan ap­pli­ca­tions al­most in­stan­ta­neously. We will dig­i­tize the process us­ing bots, imag­ing and work­flow tech­nolo­gies to im­prove TATs and en­hance the client ex­pe­ri­ence”


APAC be­lieves in lever­ag­ing the strong startup ecosys­tem in In­dia, which got de­vel­oped over the last few years. It is in dis­cus­sions with many star­tups to de­velop in­no­va­tive stuff. For ex­am­ple, one of the startup has the tech­nol­ogy, data and al­go­rithm to process the geo-tagged mo­bile us­age data to iden­tify the pro­file and lo­ca­tion of peo­ple present in a spe­cific lo­ca­tion and send tar­geted prod­uct / ser­vice mes­sages.

“An in­ter­est­ing use case could be to send cus­tom­ized mes­sages to of­fer home loans to peo­ple vis­it­ing home loan or prop­erty melas in the tar­geted mar­ket. Can I of­fer tai­lor-made of­fers? You can achieve hy­per lo­cal­iza­tion only by blend­ing Phys­i­cal and Dig­i­tal mod­els.” says Sharma.

San­jay Sharma claims he has been able to de­velop a sys­tem which is ac­ces­si­ble through a mo­bile or on a de­vice through hotspots

Sign­board of a branch of­fice of APAC Fi­nan­cial Ser­vices

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