Think digital, think detail to drive growth

The past decade has witnessed the evolution of non-banking financial companies (NBFC) to fuel the country’s diverse credit and financial needs. Leading players thrive on digital capabilities, and continue to be smart, agile and resilient. The pandemic has accelerated the pace of digital adoption, and NBFCs have added to their offerings digitally.
 
The big question is — how will NBFCs re-align to changing customer expectations, technology developments and growing competition? Let me outline the opportunities that can be leveraged — by investing in people and customers; maximising operational efficiency and performance, which will eventually lead to growth and profits.
 
The pandemic has reinforced the importance of having an agile team. Given the fast-changing competitive landscape, the team has to be equipped with digital skills, and will have to upgrade skills through a process of continuous learning and re-learning. Investing in our people, nurturing them to grow beyond their roles would create a culture that breeds fresh thinking, fosters innovation and drives growth.
 

The customer has to be at the centre of everything that we do in our business. How do we go beyond the conventional norms and offer them more, so that it will enable us to bring more value and drive scale?
 
NBFCs across categories are rapidly widening the scope of their offerings and there is immense potential to bring in more. The opportunity lies in not just bringing to the forefront a suite of products and services, but continuously innovating and engaging with the customer throughout the value-chain. A meaningful engagement with a specific untapped customer segment goes a long way in building loyalty and retention.
 
For example, an NBFC which offers two-wheeler and auto loans can also offer value-added services. These include guiding the customer to choose the right vehicle, managing the registration and other processes. Here, it is important to understand the exact requirements of the customer and then customise the offerings.
 
Companies and their allied ecosystems are integrating a host of financial services into their bouquet of offerings. Here is an opportunity for NBFCs to seamlessly fit into this ecosystem. Retailers, auto dealers, e-commerce companies, and real-estate developers are smartly embedding financial services to serve their customer segments. For customers, the attraction is the easy access to a financial option to their online buying journey. Example, a consumer can pay via the retailer instantly or opt to buy-now-and-pay-later.
 
Business functional roles should be re-assessed and re-aligned and one such approach that can be adopted is leveraging new technologies with fintechs across the value-chain for generation of leads, customer onboarding, underwriting, disbursements and collection. For instance, artificial intelligence (AI), machine learning (ML) and big data have enabled lenders to capture individual customer insights and build alternative credit scoring models.
 
There is a paradigm shift in the underwriting process — earlier, the models were based only on a few credit parameters. With ML, the lender can now analyse more than a thousand data points to assess the credit risks. AI-powered chatbots and voicebots are able to create personalised engagement with customers.
 
Another area is the deployment of robotic process automation, where manual and repetitive tasks like loan processing, bank reconciliation, or customer on-boarding can be automated. Cloud computing, too, is gaining momentum. This, being a low-cost storage option, is easily scalable and offers high-level processing capabilities.
 
NBFCs will have to continuously strengthen the governance mechanism to garner trust from stakeholders. A digital-led model will bring operational efficiency, optimise cost and have a positive impact on the bottom line. Building a tech-centric culture and nurturing talent will enhance productivity and efficiency; and finally, a customer-centric approach will drive growth, open new avenues for revenues and drive profit.

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The writer is Managing Director & Chief Executive Officer of Tata Capital