CEO Panel Discussion
6 BFSI CEOs discuss the current scenario, technology adoption & digital transformation strategies at Finnoviti Conference 2021:
Rajeev Yadav, CEO, Fincare Small Finance Bank
Covid has significantly changed the directions of the digital transformation. Digital has become the way of doing business, not just for the institution, but for the customers and the ecosystem around us. Fincare Small Finance Bank is a technology-driven bank and our focus is on rural banking. Our employees were using digital tools to do all the activities in the field with the customers using business solutions, but they were employee-laid models, which was a challenge for us. But nowadays, due to the rise in the smartphone adoption in the urban areas, customers are comfortable in using mobile application and they are able to do active transactions using mobile banking software, loan origination software, account opening software. So, fundamentally there is a huge journey to cover in digital for the future.
One of the best outcomes for our
businesses is digital because we do not deal with physical assets. If we digitize the way we work, then fundamentally whole models can be changed. Smartphones are the oxygen for the business; it has helped in knowledge transfer and understanding of the technology.
Earlier data was being used freely to do all kinds of business activities. But now everybody is stepping up and becoming more conscious about the end-users of the data. I think the financial services are more private there is a need to set up a regulatory platform to moderate the data. The end-user data is thus protected and there are data protection laws, which will be controlled and people data is put in the public forums in a regulated manner.
I do not think data will remain free of cost because there are specialized institutions that are building the technology and doing a high-quality job on data collection and storing, so it will be a paid service. However, the cost will be lower, compared to manual collection of data.
The rural market is still cash-driven. We may transact digitally and give loans to rural customers digitally. But rural people withdraw cash, earn in cash and pay back in cash. We need to digitize the journey of the rural customers. There is significant transformation required in the rural world, while in urban there are UPI and QR codes and most of them have adopted the non-contact solutions. We are hoping that majority of our rural and semi-urban customers start adopting cashless transactions. The way the financial services are administered and executed; it could be a game-changer for many of the stakeholders.
Amit Malik, CEO & MD, Aviva India
According to me, personalization and customization will take things forward. In the life insurance industry, customers want to customize their products based on their lifestyles. Technology will use data and will integrate into own systems and current tools. In the future, you will also include health data as a surrogate to underwriting systems.
For example, if 2 people have 2 different lifestyles and you get their health data, they would want personalization and customization of services. How can this be achieved? It will be a challenge and it needs to be faced by the companies. We as an insurance company must start to rethink about our products. We are talking about redefining life expectancy to make the product relevant, and it is the challenge that we are facing.
According to me, the secret of any proposition to be successful is how you engage with the customers and educate them, because if we are not able to educate them and provide a solution, then it is a job only half done. For getting scalability, and getting the business institutionalized, you need to educate the person. It is an important element when you look at scalability in financial services.
Insurance is a complicated industry, so we need to focus on simplicity. If insurance penetration has to increase from 3.5% to 3.7% in 5 to 10 years, then we need to have products that are amazingly simple for people to understand. Customers should be able to understand what they are getting into. The regulator is doing a critical job by mandating simple products contending that it will help to increase the penetration in India. The simplicity of the product should be across the financial space because financial literacy is still a challenge in India. We should build simplicity into products and it will help the larger population of India.
When we talk about technology innovation, I think we need to relocate our risk models, competing models to give wings to all these ideas. Companies cannot forget their risk modelling and risk innovation practices. India is a vast market and there are lots of tools. We all need to focus on increasing financial literacy in India.
Prakash Kandpal, MD & CEO, SBI General Insurance Co
There are high-risk conventional methods in the banking and insurance industry. The customer is the king, everything revolves around the customer. It is essential that you think about the customer journey or business product journey. The conventional insurance model used to be channel-driven but it has now changed to digital delivery.
There is a question mark on the relevance of existing channels. Insurance companies must be able to reach the customer and technology is rapidly enabling all of us to disturb the value chain and become more productive. The entire journey should be reengineered from the customer point of view.
If you talk about new projects, it depends on the 2 things: What the customer wants and how these things can be made digitally available to the customers? New disruptions will be coming in terms of digital, whether you call it a process or product.
Earlier, we were defining financial inclusion with the opening of the bank account. Today, banks have presence practically in every village in the country. The rural population is having accounts with the bank. WhatsApp-based products are simple to understand, easy to buy, and cost-effective. The bank should give confidence to the customers by providing overdraft facility, either life insurance or general insurance product, and we should educate the customers. I am confident that in the next 5 years, we will be able to
cover the entire population; there will be another wave of economic activity in tier 4 centers and rural areas.
Lav Chaturvedi, CEO, Reliance Securities
In the last 9-12 months, the capital market has become the biggest beneficiary. The growth of the capital market journey is exponential ly expedited. Even when it is going at this fast pace, it is just 3% to 4% of the GDP, which is less compared to the rest of the world. Trading in the capital market has become 2 minutes rule - in 2 minutes you make money. We need to sustain this type of momentum that has come in the digital space and the customer lifecycle transformation. We must look for systemic digital engagement.
Reliance Securities is present in all the primary locations across the country. We still need to create a kind of awareness and inclusiveness to ensure that there is enough education among the people.
We believe in systematic digital engagement. It is the last mile connectivity on the phygital model. We will be going to see a tsunami in the financial services. India must be a 5 trillion economy soon, and soon the capital market will be 5 trillion. The last mile connectivity must be complemented with the investor trust.
There is need f or technology, ecosystem, demand, supply, proposition, intent and there is a requirement for collective ease of doing the business. Banks have 70% to 80 % penetration in the country through Jan Dhan Yojana and various other initiatives. The person who opens an account should be able to transact across financial services on a digital or in any form of seamless function. There is convenience for the customers and for them to understand this, they need to be educated. There is also need for awareness and companies should deliver what customers are looking for. However, there is a constraint like compliance requirements.
‘One KYC’ is the propeller that can increase the penetration of financial services. ‘One KYC’ for all the financial services, including banks, should be seamless with the press of the button. We have been going through unprecedented crisis and it will be once-in-a-time opportunity if we put simplicity and digital last-mile connectivity, which together can deliver something to the end customers. India can them be one of the fastest-growing economies, but one of the most inclusive economies too.
Joby CO, CEO, Dvara KGFS
Microfinance is a social business. It is based on touch and engagement. The covid-related social distancing has affected our business. Microfinance is all about social group meetings, you must be in the village. I see a lot of mixed solutions have failed in this new paradigm. We had sent our AVPS across all our 300 branches so that customers do not have to look for a bank ATM or bank branches as cash can be withdrawn at their doorsteps.
The small business loans needed a personal discussion and for this you need to travel to customers’ place and have personal meetings with them. Today, there are facilities like WhatsApp video calls and meetings can he held online. I am sure there will be more technology adoption.
Giving cattle l oans has been a challenge. We developed a system whereby the cows can be identified. The cow’s nose is like the Aadhaar and using technology, we were able to get details like the age of the cows, yield of milk, general health etc. Earlier, our field officers could never get such data by looking at the cow. This is a technology using the mobile and is very scalable.
Today most people have one or more bank accounts but it is still a challenge to make them meaningful use of the accounts. Data for underwriting purposes is still a challenge. I am sure the next wave of changes will come from data and digitization.
The financial services sector is already a disruptive sector. When you bring the National Umbrella Organization in the cooperative banking sector, there will be a rise in the payment solutions and this will create data for underwriting customers meaningfully. There are predictive models and algorithms to predict customer behaviour to give loans to the customers.
While there has been a lot of emphasis on digitization, I do not think the physical channels will be outdated for microfinance. There will be the emergence of omnichannel where the physical channels will converge with digital channels.
Anubrata Bis was, CEO, Air tel Payments Bank
There is a high cost to serve in India, compared to other markets. Today, the cost of customer acquisition is huge, which means if you want to serve retail banking customers, there is a lot of money consumed by the branches. In the last 10 years, India started spending hugely on public infrastructure. Aadhaar has made the cost of customer acquisition exceptionally low and all banks are connected in real-time, which provides convenient payment solutions,
India is now witnessing the second wave of creating public infrastructure. The setting up of payments banks and the alternate banking licenses are rapidly driving inclusion, deeper and sharper.
The entire movement towards digital identities initially started by Aadhaar is now going to be used by account aggregators. Also, the movement towards GST will get things together.
India is still a cash economy and 87% of the people use cash for carrying out transactions. The number of smartphones in a country will be 300 million in the next 5 years. It will allow education of the customers using digital channels, including platforms like WhatsApp.
In spite of these developments, India is way behind as far as public infrastructure is concerned. Creation of public infrastructure has to be hastened.
The banking industry has come out as a hero during the covid crisis allowing access to millions to customers to the bank branches and withdraw cash. It is a phenomenal achievement; a very few economies have achieved it across the world.