Digital Foundation & Tech Strategy for New Normal
What best technology strategy can NBFCs adopt in the world of new normal. Is there a need for new platforms to be developed? How much to adopt and how much to invest in technology? Experts discussed such questions in a panel discussion at NBFC’s TOMORROW conference. Edited excerpts:
Sumit: What will be the digital foundation pillar for starting an NBFC?
Rachit: The first and foremost requirement is good technology. Because that is the only tool that can be used to leverage data capturing. AI and ML can help you with the processing of the data and let you take correct decisions. The technology has to be proprietary. Your secret sauce if it may be put in lighter terms. The second important factor would be collaboration with the right players. Collaboration with the right company should bring value to the lives of the customer. The third important ingredient would be to have fully secure channels. It should be ensured that the customer documents and other sensitive data are secured. Once everything is done it should be made sure that the Ease of Use is maintained. The customer would want to get everything done in just one click.
Sumit: Which services do you believe can be focused on for improving the technology strategy of NBFC?
Ashok: SMEs in smaller towns are still not very tech-savvy. The technology currently focuses on customer acquisition. It is further used to do a lot of promotion through SMS and other channels. In a true sense, NBFC is much more than this.
The key question to be answered is: How much technology-driven underwriting is being performed? This aspect is still in a very native stage. There are 3 aspects of a loan: (i) A customer’s ability to pay has been digitized to large extent. (ii) The intention to pay by the customer cannot be accessed by technology. A lot of work has to be done in this field. (iii) The collection part of the loan should also be digitized. There is very little being done on this front.
Sumit: Those NBFCs who are starting their journey into digital space, where should the journey start?
Vijay: NBFCs should prioritize on their need for technology. Various options would be (i) If they want the entire life cycle to be digitized (ii) Start in between the cycle (iii) At least the collection front should be pushed to become digital due to the current situation. It can happen at various levels; it depends on where the NBFC stands and how much are they willing to invest?
Sumit: With a small budget how can NBFCs maximize their ROIs?
Anish: More than checking for the ROI, the NBFC should know which issues are they trying to solve while going digital. Another important decision will be
whether the NBFC has the right processes for the chosen strategy. The customer requirements have to be placed neatly for easy adoption of technology. Going by the traditional platform or project-based approach would help. So that as and when the requirements arise or go down the APIs or modules can be added or deleted. The low code approach helps in manoeuvring the newer software faster. Agile brings the business and technology closer. This helps in value-added features to the product.
Sumit: Adoption of agile is increasing. Due to the current scenario, Work-from-Home and Work-from-Anywhere are becoming a new standard. What are the challenges due to this and what recommendations for smooth working?
Mohit: The new technology has enabled the workings of many offices without being physically present. This is not easy to achieve. Pre-pandemic the technology was designed for data centres and branches. The user would be physically present. Now the challenge is that the employees are away from sight. Challenges come in terms of visibility, availability and security. Giving
access to the unreliable network to them to work on enterprise data is a big issue. The future of work is going to be hybrid. To make consumers simple and enterprise secure has been our endeavour. With the launch of ‘Anywhere Workspace,’ we have a complete integration platform. From data centre to delivering securely and combination of various products of VMware.
Sumit: What would be your recommendation for modernizing the legacy landscapes?
Mohit: It’s all about applications. How well modern applications are going to help the customers as well the employers. Our focus for the digital platform has been on 3 pillars: (i) Application (ii) Where this application is being done (iii) How this application is going to be accessed?
Sumit: Technology can be a game-changer. What is your view?
Rachit: It takes a lot of effort and brainstorming with all players to develop the technology. Technology can be used to leverage growth, but that is not the only criteria. It’s true that technology indeed helps acquire the customer. But at the end of the day technology should be able to solve the problems faced by a firm. Right business model backed with good technology is a great asset for the company.
Ashok: Our customers are not very techsavvy, so we had to think and innovate to use the technology to our advantage. The long application form was designed in such a way that it could capture the data from PAN card, Aadhar card and Check and fill the information in data. With a couple of clicks, the whole process of filling of forms could be done. Because of the language barrier, the customer is at a loss of what to fill.
The technology should also be used to increase efficiency. The customer expects us to process the loan application in a lesser duration. This can be achieved by adopting a good platform. With competition getting tougher day by day, time can be deciding factor.
Sumit: Continuous transformation is the need of the hour. New challenges are coming every day. What’s your view on this?
Vijay: In pre-covid times we were trying to build better physical infrastructure. Today the focus has shifted towards technology. The bottom line everywhere is how can technology (i) improve the efficiency (ii) help in decision making and (iii) scale up to the organizations’ demands. Anish: What do you want to modernize? Things that will undergo rapid changes. The origination systems, collection, customer acquisition are highly configurable. Accounting standards do not change that rapidly. This need not change very fast unless there is a change in the environment. For example, blockchain technology is a long way from becoming new normal.
India is going to be a phydigital market. A large chunk of our population does not even own a smartphone. But the current crisis has worked as a catalyst for many transformations. The business models will also have to be adapted to a new dynamic environment.
There is a solution through technology for most of the problems. But is it scalable, economical and is it relevant to your business and customers? These questions must be answered before jumping in to get new technology.
Sumit: Cybercrime levels are rising. How are you fortifying the organizations and the applications?
Mohit: In the race of being the first to adopt the technology, sometimes the security aspect of workload is compromised. There is a race between the bad guys and the good guys. And many a time the bad guys win the race. There can be two situations: (i) either you are already hacked (ii) or you don’t know you are hacked. There has been an alarming 93% increase in ransomware attacks. We try to make security an intrinsic part of the application or platform. We look at security from 4 angles: (i) The end-user side. EDR: End User Threat Detection is one of our new additions. This helps in preventing threats by capturing user behaviour. (ii) Network side. NSX: defines how the network should behave. How the traffic is managed in a data centre. So that security is not compromised. (iii) Clouds. Cloud Health: this manages security in a multi-cloud environment. (iv) Device. Workspace1: this helps in having secured devices that access the enterprise applications.
Sumit: what will be your recommendation for the viewer?
Ra c h i t : I would r e c o mmend spending more time on the development of the platform. This is the backbone of technology. But should be open for plug-nplay options. Keeping the system dynamic is the key in the fast-changing environment.
Ashok: Build something for the large 80% of MSMEs. These people are not even accessing e-mails. Build something to support the bottom half of the pyramid.
Anish: Focus on digitalization and not digitization. And being clear in being the part of the value chain the firm would like to be part of. Think platforms rather than software. Think and adopt AGILE. Technology is not to be treated as a separate department. Everyone should get involved.
Vijay: Any technology has to be fluid which gives room as things develop.
Mohit: I would like to emphasize that focus should be given to the foundation of the technology on which the newer applications will be built. The customer experience is going to depend on the foundation. Keep innovating and always remain customer-obsessed. These are the 2 mantras we would like to follow.