NBFCS DRIVE ON MULTIPLE FRONTS - Banking Frontiers

DIGITAL TRANSFORMATION

NBFCs DRIVE

ON MULTIPLE FRONTS

Vol. 20 No. 8 December 2021 `75

Pages 56

www.bankingfrontiers.comwww.bankingfrontiers.live

Turtlemint pg 6

Indian Bank pg 14

Future Generali pg 24

JM Financial pg 33

NABARD pg 38

Presents

The Pandemic aftereffects are slowly fading and the economies are rising. There is a new optimism in the air, newer opportunities. Organisations are now stepping up the gas on growth by hiring more, investing more and experimenting more.

One of the most important boon is the quick transformation into the world of digital. The world of remote meetings, remote events, remote customer onboarding, servicing and the acceptance to a world of digital possibilities and innovations.

It is in the midst of these possibilities that Banking Frontiers presents its 11th Finnoviti and 8th Technoviti Awards and Conclave 2022 with the Theme: Innovate to Accelerate.

This is going to be a two-day conference which will be followed by the Technoviti Awards on Day 1 for Financial technology and Fintech innovations and Finnoviti Awards and Conclave for Financial Services and Technology Innovations.

Innovate to Accelerate will cover interesting themes around: Ecosystem building, Global expansions, Digital Acceleration, Investments, Trending technologies and much more.

Join us in Co-creating, Co-innovating and Rediscovring the growth of the financial services which is accelerating itself to newer growth trajectories. Join the Finnoviti & Technoviti 2022 conference, Share your nomination with us, meet up with your potential partners and customers and Engage, en-roll and transact. In short with Finnoviti, Technoviti the twin carnival of innovations, you can Innovate to Accelerate.

For details contact us

ASHISH VERMA +91 - 98332 36943 [email protected]

STALIN SALDHANA +91 - 91677 94513 [email protected]

Call for Nominations!

2022

BANKING FRONTIERS

THEMEINNOVATE TO ACCELERATE

K N O W L E D G E P A R T N E R

Virtual Summit l 6th March 2022

Banking Frontiers December 2021 3

Editor’s BlogManoj AgrawalMobile : 98673 66111Email : [email protected]

December 2021 - Vol. 20 No. 8

Group Publisher : Babu Nair

Group Editor : Manoj Agrawal

Editor : N. Mohan

Editorial Mehul Dani, Ravi Lalwani, Aditya Arya

Research Editors V. Babu, Ratnakar Deole, W.A. Wijewardena, Sanchit Gogia, K.C. Shashidhar, Dr L.S. Subramanian, Ajay Kumar

Advisor-Alliances Ateeq Siddique

Marketing Kailash Purohit, Wilhelm Singh, Dhara Thobani, Rohit Kahar,

Events & Operations Shirish Joshi, Stalin Saldhana, Pramod Jadhav, Ashish Verma, Ramesh Vishwakarma, Sushant Tulapurkar

Design Somnath Roy Choudhury, Sudarshan Herle

Published By Glocal Strategies & Services D-312, Twin Arcade, Military Road, Marol, Andheri (E), Mumbai 400059, India. Tel: +91-22-29250166 / 29255569 Fax: +91-22-29207563

Printed & Published by Babu Nair on behalf of Glocal Strategies & Services and Printed at Indigo Presss (India) Pvt Ltd., Plot No. 1C/716, Off Dadoji Konddeo Cross Road, Between Sussex and Retiwala Indl.Estate, Byculla (E), Mumbai 400027.

Editor: Manoj Agrawal (Responsible for selection of news under PRB Act)

Throughout the year, I have written about business and technology and risk and compliance and more. Since this is the year end, let me look at people in this final edit.

2021 has no doubt been a disaster in many ways for many p e o p l e . W i t h o u t dwelling further, I also observe that it has been a tide that has lifted many people.

The talent demand has grown dramatically during the year, especially in some key areas like cybersecurity, data science, machine learning, payments, open banking, risk management and many others. All these areas have experienced a rapid level of growth and transformation, which is being powered only by human intellect. This tide has lifted those who are already in these areas and those have joined in recently.

Another interesting development is that more and more people are going ahead and doing short term courses to augment their knowledge and advance their careers. I see more and more posts on Linkedin where people post what new course they have done and got certified. This is a good indication that there will not be a situation of an extreme talent crunch in the years ahead. For institutes and organizations offering such courses, this a fertile ground. Banking Frontiers too offered a couple of master classes on AI in Financial Services. We hope to scale up these master classes further in 2022.

One area where most large financial organizations are hiring is at the frontline. Organizations that have a large customer base and are looking to expand further, are boosting their fontline workforce to acquire new customers and to cross-sell to existing customers. Technology helps engage with the tech savvy customers, but for the masses, a first-time purchase of an insurance policy or a mutual funds or a home loan will not be a click-click-click process. Even for the tech savvy, assisted models are growing for complex products.

So, let me end with the thought that 2022 promises to be a year of a variety of positive transformations – for individuals as well as organizations – and we at Banking Frontiers look forward to sharing such developments with all our readers.

2022 could be a

glorious year

N E W S Regulator

4 Banking Frontiers December 2021

Bangladesh to have cybersecurity response teamT h e B a n g l a d e s h Bank is setting up an emergency response team for the financial sector, Fin-Cert, to avert cyberattacks. Bangladesh had faced a major cyberattack 5 years ago when hackers managed to steal $81

million from the central bank’s accounts with the Federal Reserve Bank of New York. A senior official of the central bank said Fin-Cert will exclusively concentrate on the financial industry for emergency security and will take measures to stave off any possible cyberattacks. The measures it will take include malware threats to banks from hackers, which the banks are not able to counter. The banks will then share the issue with the Fin-Cert platform anonymously and also alert other banks and check if anyone else is having similar problems. If any banks have a solution, they will share the information on the platform. Fin-Cert will also monitor the banking sector’s cyber security situation and provide necessary support and advisories to help prevent probable and imminent cyberattacks.

RBI working out details on CBDC implementationThe Reserve Bank of India is working out a phased implementation strategy for introduction of Central Bank Digital Currency (CBDC) by examining use cases to avoid any disruptions, the Government said. The RBI has moved a proposal to this effect to enhance the scope of the definition of ‘bank note’ to include currency in digital form. The government told the country’s Parliament that the purpose of creating a digital currency is to provide significant benefits, such as reduced dependency on cash, higher seigniorage due to lower transaction costs and reduced settlement risk. The new digital currency would also possibly lead to a more robust, efficient, trusted, regulated and legal tender-based payments option.

Indonesia, UAE central banks sign agreementThe central banks of Indonesia and the United Arab Emirates (UAE) have signed an agreement to boost payment system cooperation. The agreement is focused on safer and more efficient transactions, cross-border payment systems and anti-money laundering and anti-terrorism efforts, the 2 central banks said. A statement issued by the UAE’s central bank, the partnership aims to improve collaboration in payment systems and digital financial innovation, including conventional and Islamic finance. The Bank of Indonesia said the agreement shows its commitment to fighting terrorism funding and money laundering, while also helping the country become a member of the Paris-based Financial Action Task Force (FATF).

Saudi Arabia to give more licenses to digital banksSaudi Arabia is giving operating licences to more digital banks. Saudi Central Bank Governor Fahad al-Mubarak said the Kingdom had issued license for its first digital banks - STC Bank and the Saudi Digital Bank this year, after the Council of Ministers approved license for 2 local digital banks. Following this, STC Pay was converted to STC Bank with a capital of SR 2.5 billion and the Saudi Digital Bank came into being with a capital of SR 1.5 billion. Al-Mubarak said Saudi Arabia has a cross-border digital currency scheme with the United Arab Emirates. He also pointed out that there is a unified currency for the clearing system among the banks in the region. This, he added, has given the country the ability, which exceeds the capability of any others in the region, to move to digital currency at the regional level.

Russia norms for banks financing eco-friendly projects

New Governor for Qatar Central Bank

Qatar’s ruler, Sheikh Tamim bin Hamad Al Thani has appointed Sheikh Bandar bin Mohammed bin Saoud Al Thani as the Governor of the Qatar Central Bank. Sheikh Bandar has spent most of his professional life in the financial and regulatory sector. Prior to his appointment as the Governor of the Central Bank, he was Head of the State Audit Bureau. He has also held the position of President of the Arab Organization of Supreme Audit Institutions (ARABOSAI) and Chairman of the Executive Council of the Organization. He has also held several senior positions in the Qatar Central Bank, where he started his career in the Credit and Banking Supervision Section, and joined the Investment Department as head of trading and managing the foreign exchange reserves at the central bank. He has an Executive Master of Business Administration (EMBA) from the HEC Paris.

The Bank of Russia proposes to ease capital requirements for banks that lend money to eco-friendly projects and raise them for those giving loans to firms that do not disclose their ecological impact. Russia is the world’s fourth-largest emitter of greenhouse gases and relies heavily on fossil fuel exports. The central bank will take climate risks into account when making regulatory decisions on so-called green and less eco-friendly ‘brown’ projects. It is expected that the proposal should help Russian companies attract extra investment, including from abroad.


Neobanks

US neobank SoFi has members, and not customersSoFi is a unique financial services institution in the US, that mostly finances student loans, but is a successful model for neobanks:

US neobank SoFi, or Social Finance, was originally a student-loan platform, but now it aims to be a

source for everything in personal finance. Headed by Anthony Noto, who was instrumental in Twitter becoming a global platform for information, and had worked with Goldman Sachs as its Managing Director, SoFi today offers personal and home loans, investment services, small-business financing, a credit card and several other financial products. It considers its customers as members and encourages them to avail more than one financial offering, a strategy aimed at cutting down customer acquisition costs. In the process, it is creating for the customers a high-level seamless experience.

In May 2021, SoFi became a publicly traded company, called SoFi Technologies, following a merger with Social Capital Hedospophia Holdings Corp. It is now a leading, publicly traded consumer-focused financial technology platform on Nasdaq. It raised $2.4 billion in cash proceeds from the transaction, which it intends to use for growth, market expansion and development of new product offerings, as well as for geographic expansion and building the first digital one-stop-shop for members to ‘borrow, save, spend, invest and protect’ their money. At present, its offerings mainly constitute student loan refinancing, mortgages, personal loans, credit card, investing and banking through both a mobile app and desktop interfaces. Its target customers are ‘high earners not well-served’, or people who have taken out financial offerings from multiple institutions.

NEWS FEED FOR CUSTOMERSNoto, who has vast understanding of technology and finance, believes that no one in the past had really built a financial services experience on one digital platform and used data to drive great value. Something unique that Noto has designed for SoFi is a feed of financial information like the news feeds on Twitter and

Facebook, and which include daily podcasts and newsletter. It also includes third-party content, using data to determine what is most relevant to a particular user. Its customers can enjoy learning freely from a certified financial planner or avail free estate planning services. The neobank plans to have a customer base of 3 million by the end of 2021.

While SoFi at the moment does not have a banking charter in the US, it is regulated by 50 states for lending, which means it has to comply with 50 different sets of compliance rules. It has in March this year, acquired California-based community bank Golden Pacific Bancorp for $22.3 million and through it hopes to obtain the national bank charter. By being a bank, SoFi will be able to offer more loans and no longer have to limit its number of mortgages. The license will also allow it to determine its own interest rates instead of relying on a sweep partner.

SoFi has partnership with 6 banks, including Metabank, Hills Bank & Trust, EagleBank and Wells Fargo.

The neobank intends to become profitable on a GAAP basis by 2023, projecting $200 million in GAAP net income in that year. While its revenue comes from lending, it expects the business to become more balanced by 2025 with greater revenue from financial services and the company’s technology platform.

BUYING GALILEOSoFi now owns the Galileo platform, which it acquired in April 2020 for $1.2 billion. Salt Lake City-based Galileo is the API standard for card issuing and is the platform that powers world’s leading fintechs, financial services providers and investment firms. The platform uses APIs to enable enterprises build financial services offerings. The APIs enable account setup, funding, direct deposits, money transfers, bill payment and other capabilities. Galileo now provides SoFi’s main technology infrastructure.

One unique thing about SoFi is that it does not use credit scores, or FICO scores, from any of the US’s credit bureaus to determine the creditworthiness of its customers. It has its own AI-based underwriting model that examines free cash flow, professional history and education in addition to a history of responsible bill payment to evaluate its borrowers and to increase customer engagement. It does not take deposits and finances its loans through venture capital, bond issues via securitization and debt financing. It has its own hedge fund to purchase the loans it issues.

STUDENT LOAN REFINANCINGSoFi today is the largest provider of student loan refinancing, with over $5 billion dollars in loans funded. Unlike traditional lenders, its proprietary underwriting approach takes into account merit and employment history to offer unique products that its ‘members’ will not find elsewhere.

SoFi’s key milestones are: u $5B+ total loan originations u Secured $1B in Series E funding in

September 2015, the largest single financing round in the fintech space to date

u First rated P2P securitizationu $2 billion + in securitized products issuedu GAAP profitable

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Insurance & Technology


How Turtlemint sells 10,000 insurance policies every dayThe platform provides advisors with digital tools enabling them to sell multiple insurance products of different companies through one single app:

Founded in 2015, India-born insurance platform Turtlemint has a unique online-offline model.

Dhirendra Mahyavanshi, Co-Founder, explains: “Our hybrid model empowers insurance advisors across the country with digital tools to navigate an otherwise cumbersome offline selling process at scale quickly. We have grown significantly since inception via our user-friendly and innovative digital platform.”

MOBILE APP, SEAMLESS SELLOne of the main reasons why Turtlemint has been able to achieve good growth is because it has not lost sight of its overarching goal to improve insurance penetration in the country by leveraging the right technology tools. It currently has a base of approximately 3.5 million clients, which it acquired online in a short span. It sells around 10,000 policies daily. Health insurance is its fastest-growing segment which has grown by 2x in the last year and by 35% y/y in the first half of the current FY.

Turtlemint has been empowering the most important cog in the insurance ecosystem, i.e., the insurance advisor by leveraging the technology. Dhirendra explains: “Our mobile app Mintpro enables advisors to seamlessly sell the right insurance policies to their clients and also to expand their business. The pandemic has accelerated the pace of digital adoption and I am happy to say that we are already ahead of the curve when it comes to creating seamless digital solutions.”

100% of Turtlemint’s business is digitally driven. The app has various facets - firstly, it provides insurance advisors with digital tools that can enable them to sell multiple insurance

products of multiple insurance companies through one single mobile application. Secondly, the app helps insurance advisors to expand their business through better service to existing clients and by expanding the client base. Dhirendra adds: “We have created a groundbreaking multilingual digital solution in the form of the Mintpro app that empowers advisors and enables them to grow their business by selling the right insurance policies, to the right people, and in a seamless manner.”

UPSKILLING ADVISORS ONLINETurtlemint has a vast pool of point-of-sale persons (PoSPs), its insurance advisors. Dhirendra explains: “These PoSPs are trained digitally and equipped

to issue an insurance policy instantly online to our prospective buyer. We have been able to create India’s largest PoSP network of more than 1,25,000 advisors. This indicates a 161% increase in PoSPs over the last year. A majority of our PoSPs - approximately 76.5% - fall in the 22-40 years age group, who are highly tech savvy. From a geographical presence perspective, approximately 9.33% are from tier 1, around 26.4% are from tier 2, and a significant 64.27% are from tier 3 cities.”

The app allows the insurance advisors to upskill by providing access to a comprehensive online skill development program. Dhirendra further says: “The program offers 70+ courses ranging from insurance advisor certification to personality development courses, sales skills, podcasts, etc. We have a dedicated section for advisors that provides several tools that can help them achieve their main goal. The tools can help them get new leads, access posters, videos, curated daily news, product videos, brochures, etc.”

IN-HOUSE TECH TEAM, TOOLSTurtlemint proactively leverages existing and emerging technologies to create efficient and customized solutions for cl ients. Dhirendra explains: “We have a tech team of 150+ developers and all the development and product innovation are done in-house. We use tools like Jira, Slack, Monday & Google Business Solutions for seamless communication between teams. We use Amazon Web Services for hosting, server space, etc.”

People and technology form the very core of Turtlemint’s business strategy. Dhirendra adds: “An unwavering focus

Dhirendra Mahyavanshi points out that Turtlemint has been fairly active on multiple social media channels


Anand Prabhudesai explains that data science and data engineering have become critical focus areas for the next phase of growth

on harnessing the value of these two factors has held us in good stead and enabled it to grow at a strong clip. More specifically, we have been able to double our revenue run rate.”

RPA, DEEP LEARNING, OCRExamples of how Turtlemint leverages technology are interesting. Dhirendra describes: “We use intelligent automation with technologies like Robotic Process Automation (RPA) for repetitive, manual and cumbersome tasks like policy database reconciliation, claims and issuance. We deploy Deep Learning models that leverage and analyze the data collected through user interactions, while ensuring that the privacy of users is maintained. These models help us to predict user churn, identify upsell/cross-sell opportunities, enhance the conversion of the leads, etc.”

Chatbots are used for handling user

queries to reduce turnaround time and improve consumer happiness. At Turtlemint, these are used to quickly respond to standard user queries. Dhirendra further states: “We deploy Deep Learning and Optimal Character Recognition (OCR) capabilities for extracting relevant information from digital documents. These are used for generating quotes from the previous year’s policy copy or RC book. The same technology is also used to reduce all the manual efforts to ensure the completeness of the data in MIS.”

GENERATING LEADS, GROWTurtlemint has also introduced multi-channel and multi-platform short story formats for content consumption. Dhirendra says: “A similar approach is also being followed for consumer education and awareness. In addition to creating visibility, this also helps in generating leads for advisors.” The Mintpro app has a GROW section which has a wide range of content. Dhirendra further says: “This content is easily shareable amongst all members of the Mintpro ecosystem.”

SOCIAL MEDIA PRESENCETurtlemint has a strong presence on social media. It has always believed that a subject like insurance and special technology in insurance needs to be accurately communicated and made relatable to the target audience so that its true benefits can be reaped by all ecosystem stakeholders. Thus, Dhirendra points out: “We are fairly active on multiple social media channels and consistently post information related to insurance concepts, educational videos, industry updates, and current affairs. A similar approach is also being followed for consumer education and awareness. In addition to creating visibility, this also helps in generating leads for advisors. For video content, we have Youtube channel www.youtube.com/c/InsuranceGyan. For the other educational and industry updates, we have active LinkedIn, Twitter and Facebook channels.”

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Acquiring Startup To Realize Data Engineering Plans

In the post covid- scenario, Turtlemint has set its targets and plans for IT, digital initiatives, for business growth in the foreseeable future. Dhirendra reveals: “Turtlemint strongly believes that the technology will continue to be the main driving force in the insurance ecosystem, orchestrating change and enabling inclusive growth. As we forge ahead, we plan to focus on automating processes and optimally leveraging data science, data engineering, Robotic Process Automation (RPA), and deep learning and OCR capabilities.”

Turtlemint recently acquired Pune based startup IOPhysics Systems. IOPhysics has a highly talented tech team. The startup aims to help data scientists and data engineers derive intelligence from structured or unstructured data in real-time. As part of their highway to a 100 Unicorns program, Microsoft recognised IOPhysics as the ‘Most Innovative & High Potential Startup’ across tier-2 cities in India. As a part of the deal, Turtlemint will also be taking over the IOPhysics IP and product portfolio. Passion Connect, the HR advisory unit incubated by Blume Ventures, one of Turtlemint’s investors, played a crucial role in this acquisition.

Turtlemint co-founder Anand Prabhudesai explains the whole process: “As our company goes into the next phase of growth, data science and data engineering have become critical focus areas. Passion Connect recognized this need, leveraged its strong network in the startup community and connected us to various startup teams across domains. We loved the IOPhysics team, their IP and product since it allows developers to be cloud-agnostic and pick data platforms that suit the best need for the use case.”

IOPhysics’ founder and CEO Ashish Gawali will join the Turtlemint team as their VP, Data Science and Data Engineering, while the rest of the IOPhysics team will join the tech and data science verticals at Turtlemint. Its USP is its flexibility to integrate any data with any public cloud data platform of choice and data visualization tool – all with an easy-to-use interface. Ashish Gawali, founder, IOPhysics, says: “When we were introduced to Turtlemint, we realized that both teams shared the same passion for improving people’s lives, even in remote pockets of the country. In addition, we have immense respect for the intelligence and experience of their leadership team.”

Brokerages


Technology, demography & geography drive growthICICI Securities, Kotak Securities and HDFC Securities top the list: Profit for bank-brokerages likely to grow 20%

The domestic capital markets continue to remain on an upwards trajectory after a strong

performance in FY2021. The average daily turnover (ADTO) increased to `27.92 trillion in FY2021 from `14.39 trillion in FY2020, registering an annual growth of 94%. As per ICRA, the market performance has been supported by favourable liquidity in both domestic and international markets, optimism related to a recovery after the graded reopening of the economy, progress on vaccination rollout and steady retail investor momentum. Samriddhi Chowdhary, VP & Sector Head, Financial Sector Ratings, ICRA, updates: “Transaction volumes remain strong in the current fiscal, with the markets clocking an ADTO of Rs56.36 trillion in H1 FY2022.”

DISCOUNT BROKERS GAININGThe pool of ICRA-rated bank brokerages reported a strong performance in FY2021 with the estimated average daily turnover (ADTO) increasing 28% y/y to `1.51 trillion from `1.18 trillion in FY2020, led by the healthy growth in the retail segment. Samriddhi explains: “Despite the changes in the margin requirements, the performance remained healthy in Q1 FY2022 with an estimated ADTO of `1.64 trillion, driven by favourable retail investor sentiment. However, the market share of the sample pool of ICRA-rated bank brokerages in terms of transaction volumes declined in FY2021 and moderated further in Q1 FY2022 as they continue to lose share to discount brokers.” MARGIN FUNDING BUSINESSBank-brokerages reported a strong

uptick in earnings in FY2021 registering a y/y growth of 40% in total revenues and 80% in profit after tax. Samriddhi points out: “Bank-brokerages have been increasingly looking at other non-broking sources of income, namely capital market lending business, distribution income and investment banking revenue. Bank-brokerages have significantly scaled up the margin funding business over the past fiscal, moving in line with the capital market rally, which has resulted in an increase in their borrowing level.”

FIRST-TIME INVESTORSThe retail broking segment has witnessed a significant disruption in the last few years due to the growing prominence of discount brokerages. The competitively priced offerings of discount brokers and the no-frill basic accounts and services have resulted in the realignment of the pricing strategy across the industry. Adds Samriddhi: “Apart from attracting clients from full-service providers, discount

Samriddhi Chowdhary feels that the ability of the bank brokers to effectively ramp up their digital initiatives would be critical

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brokerage houses have helped expand the market by bringing on board a large number of first-time investors. While the market share for bank brokerages in terms of active clients moderated in FY2021, primarily owing to the faster scaling up of the discount brokerage houses, they reported a strong performance as reflected by the healthy operating metrics and surge in earnings.”

RAMP UP ONLINE CHANNELS ICRA expects bank brokerages to continue to build their retail franchise and focus more on technology and digital models for customer acquisition. Samriddhi elaborates: “The cost structure and operational efficiency of the bank brokerage companies also improved over the past few years with focus on the rationalization of branches, coupled with cautious efforts towards the transition to a digital business model, thereby improving the operational efficiency across brokerages.”

Bank brokerages are also increasingly looking at the emerging demographic opportunities and new geographical base, which is facilitated through online channels. Samriddhi feels: “Going forward, the ability of the bank brokers to effectively ramp up their digital initiatives, attract millennial clients and expand to a newer geographical base such as tier 2 & 3 cities would be critical.”

BETTER BRAND RECALL, TRUSTSupported by these factors, bank brokerages are expected to register a healthy growth in client addition as well as transaction volumes, though their share in total active clients would moderate owing to the rapid expansion of the discount broking model. The blended yields are expected to compress going forward, though the focus on fee and fund-based income would support the profitability. Samriddhi indicates: “Bank brokerages are expected to continue to enjoy better brand recall, trust, higher credibility and financial flexibility by virtue of being a part of banking groups and would, therefore, remain a prominent part of the industry value chain.”

PROFIT, BORROWINGS, GEARINGICRA expects the net operating income (NOI) of bank brokerages to grow 20-25% y/y in FY2022, supported by steady broking income along with an uptick in the margin funding and distribution businesses; the ramp-up of other capital markets related businesses could further support the earnings profile. Samriddhi predicts: “The net profit for bank brokerages is expected to grow 17-20% during the same period. The borrowings levels of bank brokerages are expected to increase in the current fiscal to support their margin funding business. The gearing levels of bank brokerages are expected to be in the range of 1.5-2 times in FY2022 at an industry level, while the gearing across entities would vary between 1 to 3 times based on the scale of margin funding operations.”

CAGR 19% IN 3 YEARSBank brokerages attribute to 21% of total active clients on NSE as of August 2021; the share was about 23% as of March 2021. Total active clients for bank-brokerages increased to 4.17 million clients as of March 31, 2021 from 2.56 million as of March 31, 2018 registering a compounded annual growth rate (CAGR) of 19%. Samriddhi states: “The top 4 bank brokerages together attributed to nearly 5% of total industry transaction volumes; the market share would be nearly 9-10% adjusting for proprietary trading volumes.”

TOPPERS IN VARIOUS CRITERIAICRA has picked the top bank-brokerages in terms of active clients on National Stock Exchange (NSE). The sample includes top 5 bank brokerages for analysis of earnings and other financial metrics, and top 4 bank-brokerages for the study of transaction volumes and yields. Samriddhi informs: “Based on NSE data on active clients, there are 11 bank-brokerages active in domestic capital markets. Our sample of bank brokerage companies include Axis Securities, HDFC Securities, ICICI Securities, Kotak Securities and SBI Capital Markets.”

She provides necessary details of 3 toppers of bank-brokerages to substantiate their positions at the industry level. She cites comparative data on different parameters: “As of March 2021, in terms of active clients (NSE), ICICI Securities topped with 1,580,233 accounts, followed by HDFC Securities (957,085) and Kotak Securities (743,206). ICICI Securities recorded `958 billion ADTO, followed by Kotak Securities (`361.26 bn) and HDFC Securities (`91.72 bn for 9 months). ICICI Securities earned NOI of `23.18 billion, followed by Kotak Securities (`19.41 billion) and HDFC Securities (`13.37 billion). As far as PAT is concerned, ICICI Securities came first with `10.68 billion, followed by Kotak Securities (`7.93 billion) and HDFC Securities (`7.03 billion).”

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Business Technology Alignment


Cooperative banks & technological adoption - Keeping pace with the competitionIn an exclusive interaction, Mannu Singh, Vice-President, Tata Teleservices shares the details about the next gen connecting solutions for cooperative banks in India:

Ravi Lalwani: What offerings from Tata

Tele Business Services have become

popular among cooperative banks?

Mannu Singh: Most of the cooperative banks have a core banking setup hosted on their data centre centrally and all branches are required to connect to the setup. The core banking services include mortgages, deposits, loan, and credit processing capabilities, with interfaces to general ledger systems, and reporting tools. Cooperative banks make these services available to their customers across multiple channels like ATMs, internet banking, mobile banking, and branches that are geographically spread across cities and states.

Tata Tele Business Services (TTBS) is a smart connectivity solution that helps bank branches to connect seamlessly. u Secure MPLS network for banks to

prioritize and set up highly efficient routes for customer traffic, get assured of a high QoS, and benefit from any-to-any connectivity.

u Multiple PRI lines facilitate the concurrent transmission of voice as well as data traffic over the dedicated line with the flexibility of using multiple channels at the same time.

u High-speed internet leased line with secured connectivity for business efficiency.

How have these helped banks to

strengthen their business?

TTBS provides advanced bespoke solutions which provide secured connectivity, flexibility and are backed by 24x7 managed support services. These solutions help build operational efficiency, greater customer satisfaction and increased customer base.

Operational efficiency: Bank staff can easily and at a quickly access accurate,

timely, and actionable information about customer relations. A single view between banks and customers at any time helps speed up operations. The bank gets further advantages by easily introducing new financial products and manage changes in existing products. The seamless merging of back-office data and self-service operations brings in a great deal of operational efficiency.

G r e a t e r c u s t o m e r satisfaction: The entire range of banking products including savings, deposit accounts, etc, are available from any location seamlessly through reliable and secure connectivity solutions from TTBS. Easy accessibility and customer operations through multiple channels, including mobile banking and the web, become possible.

Increased customer base: The availability of real-time transactions and the entire portfolio of financial products available through the internet and mobile banking enable reaching out faster to customer and helps in increasing the customer base. The flexibility to scale up solutions helps in easy expansion of services.

How does Tata Tele Business

Services help banks identify the best

technologies and services to achieve

their business goals?

Tata Tele Business Services works as a progressive digital catalyst to enable the banks to adopt the best connectivity and collaboration solutions that significantly boost their customer experience and help them to do big. The most


important challenge in the transition towards ‘digitization’ is the cooperative bank’s preparedness and readiness in terms of technology and innovation. Some of them lack reliable connections that can ensure secure transactions and protection of all customer data. Given the transaction data’s sensitive nature, there is a need for a seamless and secure communication channel that provides the right collaborative tools to make transactions more efficient. They must also make sure that they are equipped with an easy to configure hosted infrastructure that facilitates a distributed working environment.

TTBS has an array of solutions to help co-operative banks leverage digitalization:

Smart VPN: An MPLS-based virtual private network that enables you to share data securely and confidentially over any internet service, from any location.

Smart Internet Leased Line: A dedicated source of secured internet service with uncontended bandwidth and symmetric upload & download for remote users.

Session Initiation Protocol (SIP): A signaling protocol to facilitate interactive communication sessions, including voice, video, and chat over the internet.

Hosted PBX: A feature-rich SIP-based telephony solution for outbound calls from any location.

Cyber Security Solutions: With ever-increasing cyber threats and

data breaches, the importance of cyber security cannot be overlooked. TTBS offers endpoint security, email security, web security, multi-factor authentication, and virtual firewall.

We have recently introduced the industry’s first ‘Customer Experience Platform (CEP)’. CEP provides first-hand experience of our solutions and services to our potential customers, and shows how they can utilize these for improving their business processes, and then make an informed buying decision. Additionally, our solution experts are available for interactive consultative sessions with our customers to guide them to smoothly integrate these solutions within their existing technological framework with minimum disruptions.

What would Tata Tele Business Services

advise banks for improving overall

customer experience?

TTBS helps with evolved connectivity and security solutions for BFSI operational efficiency and improved customer experience. As the cooperative banking sector sets upon its post-covid digital transformation journey, the key imperatives that it must consider include:u Have robust smart internet

connectivity which is highly secured. u Focus on enhancing d ig i ta l

banking experiences as customers are becoming more comfortable with digital modes of banking and transactions.

u Emphasize more on the adoption of cloud solutions which are capex and opex light and provide anywhere, anytime working flexibility to the banking workforce.

u Stress more on cybersecurity and data privacy to provide secured and uninterrupted services. To add further, a better managed

toll-free number can help the bank bring a paradigm shift in its customer experience by enabling customers to conveniently reach out to the bank without any cost - this is also as per RBI’s recommendation.

How is Tata Tele Business Services

helping banks migrate from the capex

model to the opex model? How does it

help - especially when the service loads

fluctuate from minimal to peak?

Being fast and flexible is at the foundation of all digital and network transformation initiatives today. For cooperative banks the cost of building and maintaining their private networks can be high and legacy connectivity solutions (like private WANs using MPLS) can be financially crippling.

This is where TTBS introduced SDWAN-iFLX which brings intelligence and flexibility. Powered by Fortinet, the SD-WAN iFLX solution offers operational simplicity, application-level prioritization, and visibility, integrated security, enhanced overall business application environment as well as much-needed resilience at an affordable price point.

Finally, how can the technology ROI be

justified?

As the businesses of customers expand and grow, their banking needs too are rapidly evolving. Post covid, the quantum of financial transactions over digital modes has increased tremendously. With the penetration of the internet and smartphones, customers are using more digital payment gateways than using cash for transactions. Cooperative Banks need to add more and more products in their kitty and at the same time, increase channels of accessibility to their customers.

With this, the need for robust networking practices has skyrocketed. Connectivity across branch locations that is seamless, break-free, with minimum or no downtime, congestion-free, and with faster speed is quite the necessity today for operational resilience. At the same time, secure connectivity is what most banks today look at. Cyber security is like insurance to prevent great financial, legal, and reputation loss which may directly impact the loss of customer base and business, especially in the competitive scenario today.

[email protected]

Customer View“For a seamless banking experience, we chose to use Tata Tele Business Services’ MPLS solution. With maximum uptime, stable and reliable VPN connectivity, and 24x7 support team, uninterrupted and smooth operations are ensured, increasing our productivity and enhancing our customer experience and digital onboarding.”

- Pragnesh J. Mehta Executive Officer IT, Sardar Bhiladwala

Pardi Peoples (SBPP) Cooperative Bank

Research Report – Data Maturity


Enterprise data strategy boosts profits by 5.97%

Cloudera has announced the findings of a global research report, created in association

with technology market research firm, Vanson Bourne. The report examines the correlation between the maturity of an organization’s enterprise data strategy (defined as an organization-wide, integrated, holistic strategy across all lines of business) and its business performance. It also explores the impact that the ongoing covid-19 pandemic and its uncertainties have on businesses.

The research found that organizations with mature enterprise data strategies in place for at least 12 months report higher profit growth at an average of 5.97%, according to surveyed senior business decision makers (SDMs). 96% of SDMs reported that the way data is handled and managed has positively impacted their organizations’ performance, and close to two-thirds (64%) reported stronger levels of resiliency from the presence of a mature data strategy. Both SDMs and IT decision-makers (ITDMs) share similar views, recognizing data as a strategic business resource, but these groups have differing opinions on operational processes and implementation.

HINDERANCES TO INNOVATIONVisibility remains a key issue for organizations, with 89% reporting secure, centralized governance and compliance over the entire lifecycle as being valuable when handling and managing data. Only 12% of surveyed ITDMs report that their organization interacts with all stages of the data lifecycle process – something immensely helpful in helping organizations achieve an enterprise data strategy. Without complete control and visibility over every aspect of data, organizations will lack key capabilities required to drive innovation.

EFFECTIVE ENTERPRISE DATA STRATEGIES REMAIN KEY Organizations see the value in enterprise data strategies but struggle to make them effective. Organizations utilizing

enterprise data strategies for more than a year reported them to be very effective (63%), along with higher profit growth. Nearly all ITDMs (91%) whose organizations have an enterprise data strategy in place agree that their current strategy is key to their business resiliency. SDMs surveyed report an average of $384,962 lost annually due to missed opportunities involving data, with the telecom industry reporting the highest average annual loss of $6,617,348.

THE FUTURE IS HYBRIDThe report shows an anticipated shift to hybrid cloud in the next 18 months. With both SDMs and ITDMs reporting that 43% of their workforce will continue working remotely in the next year, organizations are investing in infrastructure to support hybrid working environments. A majority (79%) of ITDMs’ organizations are looking to house their data and performance analytics on hybrid architectures. Among cloud options, multi-cloud emerged as a clear favorite, with 44% of ITDMs indicating their preference for multi-cloud architectures in 18 months’ time. With the hybrid data cloud, organizations can access and analyze data fast and with ease to make smarter, data-driven decisions to effectively meet the demands of today’s hyper-competitive business climate.

Accessing and managing data from multiple sources and locations will give organizations the control and flexibility of utilizing a hybrid workforce while still being able to run business as usual. Nearly all SDMs (92%) believe that making sense of all data across hybrid, multi-cloud and on-premises architectures is or would be valuable. This finding mirrors the sentiments of a majority of ITDMs (90%), who report that managing data with at least some cloud capacity is a priority for their organization. A similar majority (89%) believe that organizations implementing a hybrid architecture as part of its data strategy will gain a competitive advantage.

DATA DRIVES SUCCESS BEYOND PROFITSUtilizing data and analytics can yield more benefits than simply increasing profit margins or gaining a competitive advantage. Most organizations recognize the vital link between Diversity, Equity, and Inclusion (DEI) initiatives and organizational success. The research found that thoughtful data collection and analytics contribute to the success of DEI initiatives. Nearly all ITDMs (96%) and SDMs (95%) believe that data and analytics are important to ensuring successful and effective DEI initiatives, and 95% of both ITDMs and SDMs agree that DEI initiatives contribute to organizational success. Organizations with effective enterprise data strategies in place are better able to utilize data and analytics to benchmark and evaluate employee diversity programs. With greater visibility over diversity within organizations, comes better decision-making, greater innovation and higher engagement in the workplace.

METHODOLOGYVanson Bourne conducted the survey online and over the phone between July and September 2021, surveying 3150 respondents holding either c-level, senior management or middle management positions from large organizations. Respondents were from 15 markets: Australia, China, France, Germany, India, Indonesia, Italy, Japan, Singapore, South Africa, South Korea, Spain, UAE, UK, and the USA.


Social Transformation

Crime & Intoxication drops where PMJDY flourishes

Sound financial inclusion policies have a multiplier effect on economic growth, reducing poverty

and income inequality, while also being conducive for financial stability. India has stolen a march in financial inclusion with the initiation of PMJDY accounts since 2014, enabled by a robust digital infrastructure and also careful recalibration of bank branches and thereby using the BC model judiciously for furthering financial inclusion. The number of bank branches per 100,000 adults rose to 14.7 in 2020 from 13.6 in 2015, which is higher than Germany, China and South Africa, says Dr. Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India, in a recent research report.

DIGITAL PAYMENT LED FISuch financial inclusion has also been enabled by use of digital payments as between 2015 and 2020, mobile and internet banking transactions per 1,000 adults have increased to 13,615 in 2019 from 183 in 2015.

In the last 7 years of launch of PMJDY scheme, the total number of accounts opened under PMJDY has reached 437 million, with `1.46 trillion of deposits as on October 20, 2021. Of these accounts, nearly 2/3 are operational in rural and semi-urban areas. More than 78% of PMJDY accounts were with PSBs and 18.2% are of RRBs, while non-PSBs’ share is 3%.

SBI’s research also shows that states with higher PMJDY accounts balances have seen a perceptible decline in crime. It has also been observed that there is both statistically significant and economically meaningful drop in consumption of intoxicants such as alcohol and tobacco products in states where more PMJDY accounts are opened.

OUTLETS IN VILLAGES UPThe number of ‘Banking Outlets in Villages - BCs’ has risen from 34,174 in March’10 to 1.24 mn in December’20. Such progress shows an impressive outreach of banking services through

branchless banking. However, the success of financial inclusion depends upon Banking Correspondents (BCs), who are micro-level entrepreneurs. Interoperability of transactions is permitted by RBI at the retail outlets or sub-agents of BCs ( at the point of customer interface), subject to certain conditions. Herein lies the problem.

`7 BN INTERCHANGE FEE The research report from the State Bank of India’s Economic Research Department further notes that it is sometimes observed that there is no uniformity among the BCs across banks regarding adherence to the above guidelines. PSBs mostly follow ‘Branch Led BC Model’, while other banks follow ‘Branch Less/Corporate BC model’. The BCs of PSBs extend basic banking services, including opening of accounts, from a fixed location under the oversight of specific bank branch. The BCs of other banks operate through ‘Micro ATM/Kiosk Application on Mobile’ and primarily provide fee-based financial services, viz. withdrawals and remittance services, using hand-held devices. This also adds to the bottom-line by way of interchange fee from the PSBs or remittance fee from PSB customers.

As a typical example, BCs convert AePS ON-US transactions of one set of bank customers, to AePS OFF-US issuer transactions and also carry out multiple AePS ON-US and AePS OFF-US transactions on the primary bank application/software. Data indicates that

the share of OFF-US transactions in AePS increased from 4% in September’16 to 51% in September’21. Considering these facts, PSBs (that opened around 77% of the PMJDY accounts) are now net payers of interchange fee. It is estimated that the PSBs could be paying around ̀ 6-7 bn per annum as interchange fee.

FINE-TUNE BC MODELSThe following recommendations have been suggested in the report to make the BC model more rigorous and uniform across all banking entities.

Firstly, as AePS works like a Point of Sales (PoS), logically the ‘acquiring bank’ should pay the interchange fee to the ‘issuing bank’. Alternatively, there could be rationalization in interchange fee as there is no level playing field in infrastructure provided by all banks. With requisite savings, banks can further strengthen/upgrade their BC model and promote financial inclusion in a more holistic manner.

Secondly, RBI should disincentivise BCs who are converting the ON US transactions of PSB customers to AePS OFF US transaction in order to earn interchange fee and more commission. For this, a comprehensive database of BC agents be prepared through IBA’s BC registry, JanDhan Dharshak App and RBI’s CISBI portal.

Additionally, the log-in to the AEPS applications of the non-branch BC model must be through Aadhaar authentication. This will prevent anyone from logging and performing unverified transactions. This will also result in BCs and their friends and relatives not being able to game the system by opening accounts with multiple banks and performing round tripping/ withdrawals.

Some minor tweaks in the existing branch less BC model could act as a multiplier for promoting financial inclusion objectives. This is all the more important as 347 million informal labour force is currently being formalized through the E-Shram portal.

[email protected]

Dr. Soumya Kanti Ghosh

Leadership


LDP identifies & grooms future leaders at Indian Bank

Indian Bank commemorated its 115th foundation day on August 15, 2021. The bank has a staff of 24,821 officers, 12,995

clerks, 2769 sub-staff and 311 full time sweepers, totaling to 40,896 staff, as of Q1 FY 22. Females comprise 28% of the staff. Shanti Lal Jain assumed charge as MD & CEO of Indian Bank on 1st September 2021. He is supported by 3 executive directors - Shenoy Vishwanath V., Imran Amin Siddiqui and Ashwani Kumar.

LEADERSHIP: ONLINE TOOLSFor existing employees, the Indian Bank conducts 4 tests in a year to test the knowledge of the employees regarding latest banking updates and policies. Earlier the bank didn’t link these tests to annual performance appraisal report (APAR) score, however, Dhanaraj T, GM, HRM / CDO, (Chief Development Officer), clarifies: “At present these tests carries weightage in the APAR score. The bank conducts Leadership Development Program (LDP) for officers in scale IV to VI and psychometric test is part of LDP. In the current FY, our bank has launched the LDP for 800 officers in scale IV. The objective of this exercise is to identify and groom future leaders of the bank.”

The LDP consists of 3 phases – phase 1 entails the administration of online tools (psychometric assessments, situation judgement test, managerial aptitude and leadership simulation tests). Dhanaraj adds: “The phase 2 entails a set of TBEIs (Targeted Behavioral Event Interviews) and GDs (group discussions) for the top 250 participants. Phase 3 consists of panel interviews conducted by the senior management.”

MAPPING COMPETENCIESThe bank gives score for knowledge test at the end of each training program. For Leadership Development Program, each tool has been mapped to specific competencies. Dhanaraj explains: “Participants are then scored on a scale of 1 (novice) to 5 (expert). After competencies of business acumen and inspirational leadership are being measured by the Psychometric Assessment Tool, the participants score at the sub competency level is averaged, to arrive at

the parent competency score. The parent competency scores are then averaged to arrive at the tool-wise score.”

TECHNICAL SKILLSThe bank finds outcomes of these tests to be satisfactory for over a period of time. The tools are intended to identify participant’s behavioural and technical skills and competencies. Dhanaraj underlines: “These tools are robust and provide a comprehensive analysis of the participant’s behavioural tendencies.”

Indian Bank conducts knowledge tests 4 times in a year. The LDP is conducted on a yearly basis, and the validity of such test is 3 years. Dhanaraj informs: “The content of each of the online tools would be regularly updated to ensure the tools are in line with market best practices.”

ROBUST TECH, INFRAThe bank conducts knowledge tests online and they are created in-house. As the LDP is a large exercise, being administered for 800 officers across various locations in India, robust technology and infrastructure is of paramount importance. Dhanaraj updates: “Phase 1 of the LDC has been conducted online without any technological

hindrances during the ongoing pandemic. All the above listed phase 1 tools have been administered online. The phase 2 tools had been undertaken seamlessly over MS Teams, with participants and assessors joining from various locations.”

E-LEARNING PLATFORMIndian Bank has unveiled the IB e-note / e-dak facility, aimed at providing a paperless working environment and to improve the turnaround time considerably. Dhanaraj elaborates: “The bank has customized Microsoft SharePoint. It also unveiled ‘Ind Guru’, an e-learning platform for its employees that offers technology enabled solutions aimed at capacity building. The bank identifies the process automation and digital workflow amongst the other initiatives as a part of its digital transformation.”

CHANGE AGENTSPost covid pandemic, Indian Bank has focused on ensuring flexibility in work and the workplace. Given the ongoing pandemic, WFH (work from home) opportunities are being explored. Dhanaraj clarifies: “A greater emphasis is being placed on employee health and well-being. The bank has appointed several change agents to drive the amalgamated organization’s new vision and mission.”

Indian Bank has been maintaining its database in SAP (systems, applications, and products) through which training data for any period can be fetched. Dhanaraj states: “The details of untrained employees for any period can also be obtained from SAP.”

PERSONALIZED PLANThe details of certification courses completed by the employees is also maintained in SAP by the bank. As part of LDP, all participants receive individual development reports, highlighting their areas of strength and development. Dhanaraj emphasizes: “Each participant will create a personalized development plan, mapped over a 9-month period. The intent of the personalized development plan is for participants to identify various tips and guidelines.”

[email protected]

Dhanaraj T informs that Indian Bank has launched the LDP for 800 officers in scale IV


Human Resources

Covid impacts job satisfaction, but not attritionPraveen Menon, Chief People Officer at IndiaFirst Life Insurance Company updates about changing employee expectations & job satisfaction scenario at his organization

Ravi Lalwani: Has job satisfaction among

employees increased or decreased

during covid times?

Praveen Menon: Work From Home (WFH) has resulted in stretched working hours combined with other issues like household chores, distractions and digital stress. These have impacted the mental wellbeing of many. Social de-stressing had not been possible till now. Our experience suggests that job satisfaction levels during the covid era had relatively gone down as compared to that of pre-covid time.

Is the trend the same for younger, middle

age and older employees? Is it the same

for men and women?

Data crunching to exactly know the demographic trend towards job satisfaction levels remains to be done. However, covid has certainly triggered a thought amongst the working population on a sense of purpose in what they do and a sense of belonging as to who they are affiliated to. This also has got accentuated with other variables of life, such as physical health, emotional wellbeing, loss of dear ones, life expectancy, and much more. So, it will be safe to assume that the job satisfaction trend would be on a lower scale for most.

In which areas have employee

expectations changed the most during

covid?

Based on the external environment and employee feedback, some of the areas that organizations have consciously started rebooting and redefining their philosophies are as follows:u Work-Life Balanceu Organizational Stabilityu Learning & Development opportunities

provided by the organizationu Holistic career growth opportunitiesu Organization values and CARE

approach

u A bigger sense of purpose & belonging

Give examples of how your organization

is increasing job satisfaction among

employees?

Following are some initiatives undertaken by us to increase job satisfaction and engagement levels amongst our employees. u EVP: We have created an Employee

Value Proposition (EVP), which is on the principles of gives & gets. Gives are the expectation from the employee and gets would be what an employee can expect in return from the organization. Gives & gets have been clearly articulated to provide clarity to all employees.

u C a r e e r K u n d a l i : W e h a v e scientifically curated career paths for employees based on their aspirations and competencies. Skillsets, role changes, career pitstops, role

changes, and timelines have been defined clearly.

u CARE: In line with our #EmployeeFirst philosophy we try and moot CARE as our motto towards our employees. Some of the initiatives undertaken include (i) Work from anywhere guidelines rolled out (ii) Additional covid leaves policy introduced (iii) Special covid allowance equivalent to one-month gross salary given to front line employees (iv) Employment opportunity to spouses of deceased employee + Children education reimbursement policy rolled out (v) Additional medical coverage for family members under group Mediclaim policy introduced (vi) Employee Assistance Program like mental counselling and doctor on call (vii) Infrastructure like laptops and telephone lines for employees to seamlessly operate (viii) Increments, bonuses, and promotions rolled out as usual (ix) Continued with recognition platform virtually.

Did the attrition rate at your organization

change during the covid times? What

are the top reasons identified from exit

interviews?

During the covid period, attrition had not increased. However, we saw a marginal spike in attrition in FY22. This trend could be in line with the ‘Great Resignation’ syndrome happening across the world.

Some roles that have opened up big time are Digital, Analytics, Tech, and HR where currently the opportunities are galore with handsome rewards. Some of the reasons cited by exiting employees are better opportunities, better remuneration, getting into start-ups, trying to start something on their own, and also taking a break to pursue other interests.

[email protected]

Praveen Menon says that in his experience, job satisfaction levels during the covid era had relatively gone down as compared to that of pre-covid time

Transformation


Deutsche Bank aims to become a totally tech bankIn a short span of time after it launched its tech upgrade, Deutsche Bank is today aiming to be a high-tech bank:

When Deutsche Bank started its tech upgrade in 2018, one of the focus points has been the use of natural

language processing and the bank has been able to derive extreme benefits. For example, its technology staff has evolved a tool using NLP to read through the bank’s archive of millions of emails exchanged between employees, partners and customers and developed sets of keywords and their relationships to people and other keywords. This offered unprecedented access to data for the bank, which hitherto remained untraced and unused. For example, the technology team analyzed emails for years for insider trading and other compliance uses. It used tools developed using NLP to create open source libraries to mine information hidden in these sources and got an insight across many additional areas in the bank.

UNATTENDED AUTOMATONThe bank had also developed robotic process automation and unattended intelligent automation with the help of specialist software companies. It now has a digital app on the desktop to automate repetitive tasks, using the tool, which it calls unattended intelligent automation. The bank has automated the integration between its systems and third-party systems. It also uses specialized software tools to implement artificial intelligence that will cut in half the time it takes to screen clients for adverse media, part of the bank’s KYC screening processes. The software scans news sentiment and context for negative news, rather than looking for rudimentary word associations.

The bank has also opted for an agile development approach, which teaches employees to think about automating processes, so everyone uses the same project management language and metrics. It has standardized the process with digital tools that do not require the average employee to be a programmer.

AUTOMATING AMLIn earlier days, money laundering regulations required manual screening of every financial

transaction. Now, using RPA, it has streamlined the manual side of the processes and is said to have saved some 210,000 hours of work that employees would typically do by hand. During Brexit, the automation process helped the bank to check over 3.4 million positions, automatically close 380,000 accounts and migrate 80,000 accounts.

The bank believes that the turnaround effort is an ongoing process and it is kept at a constant momentum. So, recently, the bank signed an agreement with Oracle to modernize its data handling software behind key trading, risk management and capital planning so that it can gain a competitive edge.

TIE-UP WITH ORACLEA majority of the bank’s applications - some 40 petabytes - are on Oracle Databases already. It decided to move the databases worldwide to more current versions on Oracle Exadata Cloud@Customer, which provides high-performance database services managed by Oracle in a private cloud. The migration that will take about 3 to 5 years, will help save millions of euros for the bank even while continuing complying with European data protection rules. Compared with software that runs in the public cloud, Oracle Exadata Cloud@Customer service runs in the bank’s own computing centers. This allows the bank keep total control of customer data, while Oracle manages the hardware and nondisruptive software updates. The system also delivers lower network latency compared with public clouds, especially critical for banking applications that require nearly real-time responses to market events.

The bank and Oracle have also agreed to form a joint innovation partnership, bringing together Oracle’s and the bank’s engineering and technology teams to explore potential uses for data security technologies, blockchain, AI and analytics to develop new financial products and services.

The bank now aims to have software engineers constitute more than half of its total number of employees and covert itself

into a totally technology driven organization.

SHOWING RESULTSWith its aim to use technology to simplify its operations, have better controls and reduce expenses, the bank, which has significant operations in investment, retail and corporate banking and asset management, has started showing results of its long-drawn overhaul process set in motion some 2 years ago by its CEO Christian Sewing. It has reported its best quarterly and half-year earnings in July 2021 since 2015, while the combined profit its 4 core divisions rose by 90% from the previous year.

The bank is a founding member of ‘Verimi’, a combination of ‘verify’ and ‘me’, which is a consortium of leading companies from a variety of industries. Its main purpose is to function as a cross-industry digital identification and verification platform to serve the needs of consumers. It provides a single sign-on for customers to access and use potentially limitless services - from banking to airline reservations to telecommunications) and allows them to transact with as many companies as they need to without having to provide their sign-in credentials each time. Using Verimi, companies can recognize users and at the same time its users can remain in control of their data. Each individual decides how much or how little to share. Verimi aims to give German (and, later, European) consumers a single, secure payment platform that can be used for transactions with any company.

[email protected]

Deutsche Bank branch concept focuses on advisory service

This article has been compiled based on publicly available information on the web, particularly the bank’s own website.


Transformation

Digital strategies help Wells Fargo regain its pre-eminenceA fraud scandal, its severe impact on normal functioning did not deter Wells Fargo. Through new strategies and stress on innovation, the bank is rebuilding its past glory:

Wells Fargo is the fourth-largest bank in the US, with approximately $1.9 trillion in

assets. It offers it various banking services to 1 in 3 US households and more than 10% of small businesses in the country through its Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking and Wealth & Investment Management.

The bank was in a major fraud scandal controversy where it created millions of fraudulent savings and checking accounts on behalf of its clients without their consent sometime in 2016 and its aftermath had dealt a serious blow to its reputation and operations. It faced several punitive actions - civil and criminal - amounting to $2.7 billion and fine of $185 million by the Consumer Financial Protection Bureau (CFPB). The scandal led to resignations of the bank’s then CEO and several other senior managers and a new management team was installed with reformation of the bank as the prime task.

The bank is now back on a sound footing having almost erased the black chapter and effected operational changes and implemented new strategies, at the same time relying more on technology, especially AI and cloud.

RESTRUCTURING, DIGITAL STRATEGYIt has undertaken a major organizational restructuring and created a new digital strategy. Accordingly, it now has 5 line-of-business CEOs in Consumer and Small Business Banking, Commercial Banking, Corporate & Investment Banking, Wealth & Investment Management and \Consumer Lending. In addition, it has created a new group for Strategy, Digital Platform and Innovation. The department is designed to enhance ‘the company’s focus on planning for the digital future and investing in the customer experience’. The bank also sees AI as a central focus for banking innovation moving forward and has stressed that

digital transformation begins at the line-of-business level, requiring every department to be ‘ideating, redesigning and reimagining the experience’.

However, digital is nothing new at the bank. It has some 30 million digitally active customers, which is 43% of its total customer base.

NEW VIRTUAL ASSISTANTOne recent outcome of this digital stress is the design and development of a virtual assistant to help the bank convert more retail banking customers into digital users. The virtual assistant will be deployed early next year when the bank is proposing to come out with a revamped mobile app and website. Named Fargo, it will be able to execute tasks including paying bills, sending money and offering transaction details and budgeting advice.

CLOUD STRATEGYWells Fargo as part of its digital strategy has also initiated a multi-cloud approach with third-party data centers to drive technological speed, agility and scalability for its customers and employees. It has engaged Microsoft Azure as its primary public cloud provider and Google Cloud as provider of additional business-critical public cloud services. With Microsoft it will use critical data and analytics services to accelerate its digital transformation, including delivering enhanced customer experiences and enabling increased employee collaboration. Google Cloud will drive advanced workloads, and complex AI and data solutions, allowing it to move faster on driving personalized experiences for its customers and clients.

The bank is also readying its mobile app, called Wells Fargo Mobile, hoping to provide its 30 million mobile active customers a new, modern look and feel and a simpler user experience using the app. The app will offer answers to the customers’ everyday banking questions and, rather than self-serving to accomplish a task, customers will be able

to ask Fargo to complete the task for them. The virtual assistant will on its part provide personalized insights and recommendations to help customers better manage their finances.

WELLS FARGO LABSYet another unique thing the bank is initiating is its innovation department, called Wells Fargo Labs. A unique thing about the Labs is a comment box on its website, where any user can offer any suggestions or thoughts on, either the innovations being touted, or fresh ideas they may have. The bank intends to create an idea of community between the innovation team at Wells Fargo, and the users who will ultimately benefit from the initiatives if and when they are implemented.

The bank is now clear that its dark period of scandals and intrusive investigations are over. With the innovations already being put out by the Innovation Labs and those still in development, the bank is clear about its resurgence and getting back to its glorious days. As the Director of Wells Fargo Innovation Group Miranda Hill says, “It is critical for the lab to continually push the boundaries on the future of personal finance and money management. The more we motivate team members to reimagine experiences, the more successful we’ll be as an organization in redefining the future of banking.”

[email protected]

A cardless ATM


Transformation


Banco Santander’s unique thrust on cloudBanco Santander, the Spanish bank with a global footprint, believes its leveraging the cloud is a strategy that can take it to unique levels in terms of products and services and customer experience:

Banco Santander, the Madrid-h e a d q u a r t e r e d S p a n i s h multinational bank that operates

in the whole of Europe and major parts of the Americas, has a unique thrust on cloud. It says this is to facilitate offering innovative products and services, to improve customer experience and to be among the top banks in the world in terms of quality and convenience. The bank is now in the process of delivering one of the fastest cloud adoption projects in the world targeting total implementation by 2023. In doing so, the bank also wants to be a fully digitally-enabled global bank.

At the end of 2020, Banco Santander had more than a trillion euros in total funds, 148 million customers, of which 22.8 million are loyal and 42.4 million are digital, 11,000 branches and 191,000 employees.

The bank had initiated its digital transformation program around 2 years ago and it is well ahead of its plan as more than 60% of its systems worldwide have already migrated to the cloud, making it a leader among European banks in using cloud in its operations. It has said it has been able to move 200 servers to the cloud every working day over the last 2 years, thus moving on its way to become the best open financial services platform. The bank believes the new system will ensure improvement in processes and high level of innovation, thereby improving processes, enabling quick innovation and offering unprecedented service quality.

UNIQUE CLOUD PLATFORMThe bank says the cloud platform, when it becomes fully operational, will host unique technologies that can deliver customer centric and innovative services and applications with better response times. When its ATM system had moved to the cloud, it was possible to offer almost instant response instead of 10 to 20 seconds in the past. Likewise, the bank is able to deliver new capabilities to its

customers in hours rather than days in the past. The platform will also help the bank to reduce its energy consumption for its IT infrastructure by 70%, contributing to its responsible banking targets.

Santander has set up an autonomous cloud-native company, PagoNxt, a fintech that brings together all of Santander’s payments businesses. It is about to develop a unique and disruptive payment services system for the bank.

PagoNxt has recently announced that it is launching its flagship merchant payments business in Europe under the Getnet brand. Getnet is already operational in Brazil, Mexico, Chile, Argentina and Uruguay. In Europe, Getnet will serve foreign and domestic merchants of all sizes in some 30 countries, whether or not they are customers of Santander or not, offering them access to multi-channel, multi-method, multi-country payments.

Santander’s prowess in cloud technology has enabled it to provide its 148 million customers across Europe and the Americas with access to vital financial services during the pandemic. It was able to migrate seamlessly to work from home for more than 100,000 employees in just days.

S a n t a n d e r ’ s c l o u d p l a t f o r m uses in-house and vendor-provided capabilities, giving its 16,500 developers access to the latest technology to enable them to add the functionality the digital-savvy customers seek.

ACCELERATING DIGITIZATIONSantander leverages its scale to invest in digital and technology and the main target is improving customer experience and revenue growth. As part of the digital plan, the bank proposes to invest over €20 billion in technology over the next 4 years. It also hopes that the digital transformation will enable it to remove €1.2 billion in annual costs from its balance sheet, thanks to possible efficiencies brought about by new technology.

USING BIG DATAThe bank’s UK unit, Santander UK, has a unique position in the group as far as use of data is concerned. The bank started a project in 2014 to make use of big data to generate value for customers. In about 9 months, it has created a highly available real-time customer-facing application for customer analytics. The app uses real-time transaction data to help the customers, for example, to understand their card spend across time periods, different categories (travel, food & drink, supermarkets, cash, etc.) and by brand/retailer. The big data platform is also used to power all the new digital applications – customer facing, or on the backend.

Santander has concluded a 5-year $700 million agreement with IBM in 2019, which ensures that its services and applications will have the backing of IBM’s most innovative and disruptive technologies. This includes big data, blockchain and AI technology such as IBM Watson, which Santander will use to incorporate AI capabilities into its operations to improve customer experience, enhance branch advisors’ expertise, and increase employee productivity.

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A Banco Santander ATM where the response time is instant rather that a few second



Transformation

MUFG Bank: Tech transformation is ‘re-imagining strategy’Japan’s MUFG Bank focuses on business transformation through optimal use of digital technology:

MUFG Bank, Japan’s largest bank and the 4th largest in the world, has always been in the forefront

in using technology to spur customer response and ultimate customer experience. The bank, short form for Kabushiki Gaisha Mitsubishi Yū-efu-jē Ginkō, is part of the Mitsubishi UFJ Financial Group, one of the world’s largest and most diversified financial groups, with presence across 20 markets in Asia and strategic partnerships with some of the region’s biggest banks. It came into being in 2006 with the merger of the Bank of Tokyo-Mitsubishi and UFJ Bank, is a mega bank in Japan along with SMBC and Mizuho and a systemically important bank determined by the Financial Stability Board.

The bank began its transformation journey in 2018 with IBM as partner, mainly aiming to automate processes and increase staff productivity across its operational realms. It called the journey a ‘Re-Imagining Strategy’ and the main aim was to undertake business transformation through the use of digital technology. The model it adopted had a focus on digitization and delivering optimal solutions to customers. It adopted technologies like Blockchain, Internet of Things (IoT) and Robotic Process Automation, and streamlined and automated day-to-day operations.

TACKLING SOCIETAL ISSUESIn 3 years, the transformation brought about an environment capable of achieving sustainable growth by efficiently adapting to structural changes in operating environments. It chose an integrated group-based management approach that is simple, speedy and transparent, delivering the best value to its customers, employees, shareholders and all other stakeholders. One significant factors of the Reimagining Strategy was the idea of providing solutions for societal issues through business activities, thereby ensuring a better society.

The bank has developed a robust framework for driving the reforms and rechristened its Digital Innovation Division as Digital Transformation Division. It also

allocated very substantial resources for the Division.

The transformation is now being taken to its next stage where the bank has redefined its goal as ‘empowering a brighter future’. This will involve leveraging the bank’s financial and digital strengths to help its stakeholders around the world. In this, the bank has invented what it calls the MUFG Way, which comprises a newly defined purpose, new values and a new vision,

DIGITIZING DOCUMENTSWhile strengthening its technology infrastructure, the bank has recently implemented a service based on robotics and AI technology, developed by a US startup, Ripcord, aiming at digitizing paper documents, especially the Japanese system of ‘hanko’ (or carved name seals) forms. The main intention is to improve customers’ convenience and business process efficiency by performing high-speed and high-accuracy digitization of paper documents, establishing location-free operational environments not restricted by place.

The bank stores over 300 million pages of hanko forms (including related documents) in warehouses and to confirm individual hankos, staff must use special terminals in limited locations which only contain certain information. Depending on the transaction, this creates inefficiencies, including making customers wait.

By introducing the new system, which is essentially digitizing the hanko forms, the bank intends to achieve a location-free operational environment. The technology that will be used is a combination of robotics, software and AI technology

The new system will allow the bank staff to check digitized images of all hanko forms and related documents from their own work terminals, providing instant access to customer information

It is estimated that a team of 4 workers would take 510 years to scan 300 million pages, while the machines operated by 30 people can do that job in about five days, claims the bank.

JV WITH ISRAELI FIRMThe bank has recently entered into a joint venture with an Israeli firm, Liquidity Capital, to help it analyze Asian startups and decide on their creditworthiness. The solution that is being developed is based on AI. The $80 million JV, Mars Growth Capital, is based in Singapore. It will mainly target health care, education and e-commerce startups. It uses a unique credit scoring model based on AI technology and real-time financial and accounting data from client bank accounts, accounting systems and CRM information captured through its API technology to forecast future earnings and cash flow.

MUFG Bank has actually started utilizing cloud services, mainly in the field of ASP and SaaS, in late 2000s. It started a study for building a common system infrastructure in the group and built an infrastructure by using a cloud services provider. However, it later opted for Microsoft Azure and initially converted its risk management system into a cloud-based one. It is now working on reinforcing the security of its system infrastructure and also examining the scope of use of Azure in becoming the common system infrastructure of the bank.

It is actually planning migration to the cloud of more than 1000 systems in its entire group. Its ultimate plan is to gain an understanding of the utilization and operation of cloud services including Azure, and working on creating an IT foundation that enables flexible and speedy response to the changing requirements of the financial market.

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Cover Story


A deep dive into how NBFCs are riding the storm and emerging stronger :

Cover Story

The high value of funding, Open API platforms like UPI, Aadhaar, GSTN and Bharat Bill Payments, and the

large number of smartphone and internet users are some of the drivers fuelling a boom in the financial which is very important for the economy. The NBFC sector has systemic linkages with the capital market and other financial entities as well as the banking sector. Despite the

difficulties caused by covid in the fiscal years 2019 and 2020, most NBFCs has managed to keep the momentum going in the face of challenges.

This report delves into some of these challenges and offers insights into the road ahead. About 50 CEOs and CXOs representing NBFCs and Fintech sector participated were surveyed on their business growth prospects and industry

outlook for the near future.Undoubtedly, the path that various

companies take to fuel their growth varies. While some companies like Aditya Birla and Art Housing focus exclusively on retail lending, there are others like NAFA and Mufin Finance that focus on the SME sector. However, a majority of the NBFCs cater to a wider variety of customers ranging from students to

MSMEs. Companies like Spandana and Svatantra Microfin have carved a niche in the micro finance sector.

Dvara Kshetriya Gramin Financials is a company that is serving the rural parts of India in 6 states and has various kinds of loans like group loan, individual loan, and even enterprise loan. According to the company’s former CEO, Joby CO: “Our mission is to maximise the financial well-being of every individual and every enterprise by providing complete access to financial services in remote rural.”

Thus there is no one-fit business model for all companies. Each company follows a model that suits its business needs and the segment as a whole covers a wide gamut of beneficiaries including SMEs, MSMEs, students, low income and underserved entrepreneurs, unorganized business sector, etc.

STRONG BUSINESS GROWTH DESPITE PANDEMICDespite the ravages of the Covid pandemic, the sector has seen substantial growth in the last 2-3 years. Going forward, there is immense confidence about short-term growth. Except for one company in auto finance which has seen virtually no growth, and another company in factoring finance which has seen a slow growth, and another NBFC offering multiple finance offerings which has seen a dip of 50%, other companies have been able to grow.

In fact, for Finway Financial Services, Covid proved to be a blessing in disguise

DIGITAL TRANSFORMATION

NBFCs DRIVE

ON MULTIPLE FRONTS


MSMEs. Companies like Spandana and Svatantra Microfin have carved a niche in the micro finance sector.

Dvara Kshetriya Gramin Financials is a company that is serving the rural parts of India in 6 states and has various kinds of loans like group loan, individual loan, and even enterprise loan. According to the company’s former CEO, Joby CO: “Our mission is to maximise the financial well-being of every individual and every enterprise by providing complete access to financial services in remote rural.”

Thus there is no one-fit business model for all companies. Each company follows a model that suits its business needs and the segment as a whole covers a wide gamut of beneficiaries including SMEs, MSMEs, students, low income and underserved entrepreneurs, unorganized business sector, etc.

STRONG BUSINESS GROWTH DESPITE PANDEMICDespite the ravages of the Covid pandemic, the sector has seen substantial growth in the last 2-3 years. Going forward, there is immense confidence about short-term growth. Except for one company in auto finance which has seen virtually no growth, and another company in factoring finance which has seen a slow growth, and another NBFC offering multiple finance offerings which has seen a dip of 50%, other companies have been able to grow.

In fact, for Finway Financial Services, Covid proved to be a blessing in disguise

as it forced it to embrace the online model of business that substantially increased its reach. As a result, the number of customers also increased. Some other companies too have done exceedingly well with Arthan Finance clocking a stupendous 300% growth. On the other hand, SRG Housing Finance is cautiously optimistic about the future. In the words of its CEO, Vinod Jain: “In the next 3 years, we are expecting to add around 4000-5000 customers in case there are no further disruptions due to covid.” While Repco Micro Finance aims to integrate 1 lakh customers in the same time period, Belstar Microfinance aims to achieve a 30% YOY growth in the next 2-3 years.

The fact that the companies have more or less successfully navigated the covid times have imbibed immense confidence about the future and most companies are confident of clocking double digit growth.

CONSOLIDATION & EXPANSIONResponding to a question about any withdrawal of loan products in the last 12 months, an overwhelming number of respondents replied in the negative. Regarding addition of products in this time and their future plans thereof, CEOs of most of the NBFCs and fintechs surveyed replied according to their business plans, with a majority of them seeing an opportunity not only to consolidate but also to expand their business.

For instance, U GRO Capital launched micro branches for direct sourcing of loans and opened 25 such branches in tier 3-6 cities of 5 states. Going forward, the company aims to increase the number of micro branches to 75.

Samunnati Financial has continued to focus on its customized financial products for the agri business sector where it serves the farmers as well as agri enterprises of all sizes. Remarks CEO Anil Kumar SG, “The company has also added a portfolio of retail loans by striking new partnerships while SME Corner plans to introduce various short terms products around supply chain finance, credit line & vendor finance products.”

On the other hand, Inditrade Capital CEO Sudip Bandyopadhyay, who is also the

Group Chairman has last year introduced the Inditrade Scaletor that offers last mile single point contact. According to Bandyopadhyay, the use of proprietary technology and data science enables the company to deliver household goods to the remotest and smallest villages of the country, even those that have no Pincode.

Many companies like Centrum Microcredit, Bhanix Finance, and KreditBee made good use of the lockdown period and thereafter by introducing new products like wash loans – for clean drinking water and sanitation facility, loans for migrant workers, street vendors, BNPL, Premium personal loan for the self-employed, etc. while some companies have shifted their focus to tier 2, tier 3, and tier 4 cities.

The last 12 months have also seen companies like Finway Financial Services change their credit policies with the travel and rental-income based sectors having turned negative.

TECHNOLOGY TO THE FOREA large majority of the respondents seemed keen to propel their business using the power of technology with AI, data processing and extraction, mobile apps, and the like being the most talked about and likely to play a pivotal role in the lending business in the near future. While the CEOs affirmed that a number of ‘Off The Shelf’ technological products are available and even customised products can be built quite easily, they flagged the

Sadaf Sayeed Sudip Bandyopadhyay

Cover Story


challenges faced in deployment of these products and added that marrying existing products to new forms of technology can be time-consuming.

Orange Retail, for instance, makes extensive use of responsive web design, mobile app, cloud computing, automation, Artificial Intelligence and social media for their business. NABKISAN Finance plans to use easily customisable SaaS based solutions like Office 365 and Zoho to further expand its business, while Pahal Financial Services is of the opinion that credit tech solutions are difficult to implement.

Sadaf Sayeed, CEO of Muthoot Microfin, opines: “We are moving towards the digital on boarding as well as collection. The adoption of the technology and data security is main challenge.”

The reliance on technology to expand business does translate into the need for tech savvy manpower. While most companies have added manpower to strengthen their technical capabilities, a minuscule number of companies have outsourced their technical segment. In contrast, companies like Spandana Sphoorty and Sampark Fin Service have not added any technical manpower whatsoever.

As BFSI and Fintech companies change their loan management system and recognize that speed, flexibility, and accuracy are of utmost importance while making these changes to cater to ever changing economic and social scenarios,

it is apparent that low-code technology is the clear winner and its usage is on the rise.

LOW-CODE & NO-CODEAditya Birla and GIC Housing Finance use both ‘low code’ and ‘no code’ solutions, while Arthan Finance, Digikredit Finance, NeoGrowth Credit, Repco Micro Finance, Mitrata Inclusive and NAFA use low-code solutions. Edelweiss Retail Finance uses an in-house engineered loan origination platform – DLP (Digital Lending Platform) based on low-code solutions. Elaborating on the benefits of this platform the company CEO Mehernosh Tata says, “DLP has enabled us to transition from paper heavy processes to offering full-fledged digital experience, making us nimble resulting in a positive customer experience.”

Interestingly, companies like Fintree Finance use ‘no code’ solutions. Even though the current loan management system of Centrum Microcredit is robust and stable, it is in favour of the use of code solutions should such an opportunity arise in future. Aadhar Housing is assessing the use of ‘low code’ for specific tasks. Samunnati Financial, Pahal, Light Microfinance, APAC, and Muthoot MicroFin too use code solutions while CanPe uses the full stack.

Bajaj Finance – auto finance has not explored its use while Art Housing, Aptus Value Housing, AK Capital, Inditrade Capital, U GRO, Satya Micro, Baid Housing, do not use any kind of code solution. Players like Dvara Kshetriya Gramin have decided to make most of the customizations required at the workflow level itself.

KreditBee CEO Madhusudan Ekambaram points out the 2 disadvantages of using low-code “Firstly, the dynamic nature of the business environment requires sufficient levels of customization, which low - code hinders. Secondly, with the rising digitization and virtual nature of operations, it is essential to possess full control over security, to identify and address varied vulnerabilities. While low-code solutions have in-built security protocols, they

restrict full control over security and access to source code.”

In summary:u About 20% the respondents are

not using No-Code & Low-Code technologies. Only 3 of the respondents in this group plan to look at these solutions in the future and another 3 have said they are not interested.

u About 15% are using low code.u About 30% are using both Low-Code &

No-Code.u About 30% of the participants have

not responded about current usage or future use plans. Overall, only very few companies

seem to care about this technology.

DASHBOARDS & ALERTSAll except 3 participants in this survey say that they have set up analytics for dashboards and alerts. Some also have real time alerts and some have alerts that are configurable. Samunnati is currently in process of development of better dashboard to cumulate the huge amount of information gathered during transactions. Mitrata has capability to generate dash board for operation, internal audit (rating of each branch) and for HR. It uses the dashboards for monthly review meeting at HO and quartile review meeting at region level. Some of the companies are in the process of developing the dashboards.

HR AUGMENTATIONAdding of IT professionals – in the past

Rachit Chawla Madhusudan Ekambaram


and the near future – is an indication about the planned progress in technology. The survey reveals that about half of the participating NBFCs say they have added people in their IT teams. Most such additions in the last 12 months are in single digits. Most have not revealed the existing size of their IT team.

Two third of the participating NBFCs say they will add more IT professionals in the coming 12 months. About a dozen expect to add in single digits while some expect to add 10 or more people. About one third will either not add or they have not shared their plan.

Overall, it appears that most NBFCs are making incremental increases in the size of the IT teams. Factors such as financial pressures or incremental technology strategy or shortage of talent or a combination of these could be the most probable reasons.

API CONNECTIVITYAPI connectivity is an indicator of the maturity of the LMS. The survey reveals that one third of the respondents do not have API based connectivity for their LMS. The other two third have this connectivity. Two companies say they are in the process of building it.

The NBFCs have connected via APIs with various gateways to connect to BBPS, ccAvenues, BillDesk, NSDL, PAN Gateway, SMS, Email, Credit bureaus, Partners, etc. The responses also indicate that many are planning to increase API

connectivity in order to speed up services.CASHe, SRG Housing Finance,

PrestLoans and Orange Retail Finance are some of the companies that have wide range of API integration.

BUSINESS CONTINUITY MANTRA80% of the survey participants replied in the affirmative when asked whether their loan management system was connected with multiple SME gateways, payment gateways, and PAN gateways to maximize business continuity. Finway Financial CEO Rachit Chawla says that these linkages help speed up and automate the process. He sees such linkages as an opportunity to get the right information and the combination of these 3 elements is essential to reduce the turnaround time.

The remaining 20% replied in the negative. Among these, KreditBee has not integrated its LMS with different gateways but the other elements of related functionalities are connected so that the turnaround time of the loan process is not compromised, while Digikredit Finance uses open APIs.

When queried which among business functionality and technology is more important to improve their loan management system, there is a widespread consensus that both are equally important elements that would propel their business. Lord Krishna Financial Services CEO Ashok Mittal opines that both go hand in hand. Increasing the business functionality leads to better decision making and customer services while technological improvement is the trend that needs to be followed. Samasta Microfinance and Dvara Kshetriya Gramin are betting on product innovation to expand their business.

An indicator of the increased use of technology by the NBFC companies is the use of dashboards for various kinds of alerts and indicating performance trends. Our survey makes it clear that less than 5% of the companies surveyed do not make extensive use of dashboards.

While Aditya Birla Home Finance confirmed use of a full-fledged dashboard

that provided performance trends and alerts, some companies like Aptus Value have created interactive dashboards for data visualization. Others like SRG Housing and Samunnati Financial are in the process of further refining their dashboards to include even greater functionalities. Fintree Finance is in the process of developing alerts to initiate early warning signs for specific functions while Light Microfinance is developing a data analytics platform.

CONCLUSIONThe NBFC and Fintech sector has not just survived but is actually one of the very few sectors of the economy that has grown even in the aftermath of Covid. No doubt, players in this sector have had to tailor their offerings and use innovative solutions to tide over the unique challenges posed by these challenging times. Increased use of technology is one such solution, along with penetration into untapped geographical areas and social strata.

Our findings suggest that CEOs seem confident of their business models. They are aware of the importance of technology and the gains that can accrue by systematically using technologies like AI Cloud Computing, Automation, etc. Going forward, many ready to invest in cutting edge technology and add relevant manpower in order to scale new heights, while some have a slow and steady approach.

Mehernosh Tata Joby CO

Customer Engagement


Logic & Emotion direct CX ImprovementsNilesh Parmar, Chief Operating Officer, Future Generali India Life Insurance shares the importance of logical & emotional aspects in customer experience design:

Ravi Lalwani: What aspects of CX design

do you see as logical and what aspects are

emotions?

Nilesh Parmar: Any CX design must balance the logical and emotional aspects. Customers are today looking for a personalized, customized experience irrespective of the channel of interaction. In our industry, the emotional aspects sometimes do matter more, given the nature of the product.

During the purchase journey, the customer is likely to use logic for identifying the need and hence the right product. However, whom to purchase from could be a mix of logic (brand, legacy, etc) and emotion (personal connection with the agent/distributor), as most insurance sales are still done through an intermediary. Post-purchase servicing requirements however will tend to be logical both from a company and customer point of view, except in the event of an unfortunate incident. This however poses a challenge since insurance is a low-touch product category and could result in loss of connection between the company and the customer leading to customer retention challenges.

Keeping this in mind, the CX design must ensure that we create simple, interactive, differentiated customer onboarding journeys which are intuitive with minimal friction. Self-service options (IVR, online portal, mobile app) can take care of customer needs logically, but to create an emotional connection with customers through the policy life cycle, the company needs to create avenues of continuous proactive engagement directly or through the distributor. This would require tools in the hand of the distributor to drive the engagement which prompts for action at appropriate times to connect with the customer at appropriate times (logical connection event leading to emotional connect/bond).

Our CX design, therefore, has 3

components: (i) Proactive customer lifetime engagement (ii) Differentiated service journey, and (iii) Differentiated value proposition.

Anything to do with the service journey (customer-led and company-led) can be termed as logical expectations, as these journey types are both prerequisite and sequential (eg policy issuance, renewal reminder, maturity pay out, etc). Proactive engagement converges with the emotional connection with the customers, these are things that the customer may not be logically expecting (eg proactive service connects, nominee connect programs, customer stories, birthday connect, etc).

Are the logical and emotional aspects

consistent across customer segments, or

do they vary?

It is normal to expect differences across customer segments on both logical and emotional aspects. For example, a financially savvy customer would expect much more logical explanations than someone who is not financially savvy. A technologically savvy (and this segment is increasing rapidly) customer would also tend to respond to logic more than emotions.

Companies, therefore, need their CX design to be able to respond to the needs of individual customers appropriately at different points in the customer life cycle. We have seen companies differentiate basis customer value, customer’s preference of communication channel, etc. Typically, a more personalized (relationship-based) approach gets used for high value customers, and low value customers get serviced through automated/efficient channels. However, if we understand the logical/emotional aspects better, we will come up with a completely different set of solutions for our customers. Most companies/industries do not have this level of CX maturity and have a long way to go in this context.

Are there occasions where logical and

emotional designs conflict with each

other? If yes, then how have you resolved

the conflict?

Logical and emotional designs can conflict during the customer lifecycle. To give an example, which is very common in covid times, customers reach out to us with moratorium requests due to their inability to pay a premium. While on one hand, we try to give the customers a customized set of options within the regulatory framework (so that they can get emotional comfort), on the other hand, we also ensure that minimum and mild collection follow-ups continue to ensure that coverage on the

Nilesh Parmar recommends that the emotional aspects of CX would be best handled by marketing (behavior experts) who can build user stories, communication workflow, design simple communication templates and create value in customers’ minds upon fulfilment


policy can continue for the customer.Conflicts can also arise due to how we

measure out people and their performance. For example, call centres have been long measured with average handling time for a call. For a customer with a grievance, if the telephone operator is in a hurry to finish the call to control/manage the AHT, the emotional needs of the customer will not be met. The design, therefore, must factor in the different expectations that the customers might have at different points in time. Not only the process design but even the people interacting with customers need to have the empathy and ability to be flexible in their approach depending on how the interaction goes.

What kinds of experts do you involve

in designing the logical and emotional

aspects of CX?

A good CX design will need experts to manage both logical and emotional aspects. The logical aspects of CX would be best handled by functional experts (SME) who can define the logical customer journeys (request-workflow-fulfilment), business analysts/automation experts who can suggest solutions that could lead to end-to-end automation of the entire cycle. The emotional aspects would be best handled by marketing (behavior experts) who can build user stories, communication workflow, design simple communication templates and create value in customers’ minds upon fulfilment. Customer experience expert would bind the entire solution and closely review pre and post-change in customer’s feedback.

Give 2 examples of logical design

improvements and 2 examples of

emotional design improvement Future

Generali has implemented?

We have done these improvements in our logical & emotional design improvements

Logical design improvements: Digital customer onboarding – new customer onboarding was mostly physical. In last 2 years, this was made end-to-end digital for both customers and distributors which has led to a reduction

in onboarding time, better onboarding experience, and lesser onboarding defects.

Digital customer DIY stack – we have launched multiple digital touchpoints for our customers to log in their requests and used RPA for instant request fulfilment. This has allowed us to service our customers 24x7 and whenever desired by them and customers do not need to approach us via physical service touchpoints only.

Emotional design improvements: Proactive lifetime customer engagement – In various studies customers have indicated that insurers today only contact for either new sales or when renewal is due. There is a lack of any human caring/emotional connect, to overcome this we are implementing a Proactive Customer Lifetime Engagement framework under which both contextual and non-contextual content using physical, phygital and digital platforms shall be enabled to reach out to our customers across their life cycle.

Customer feedback is being sought post every interaction (through transaction NPS) to identify what is working and what needs improvement. Detractors are being engaged with to ensure that their problem is understood, and corrective actions are taken for that customer/transaction as well as structurally to ensure that other customers do not face similar issues/concerns.

Technology is surely needed for

implementation. Do you see technology

being used to create better CX designs?

How?

Customized/personalized journeys cannot be created without technology

intervention. The use of digital and data analytics is key to creating these experiences for the customer and distributor. Companies are already making extensive use of technology for customer experience, and this will only increase over time.

We have been able to do this for our self-service platforms with full integration to create a seamless customer experience, for making internal processes more straight-through and efficient such that first-time resolutions can be provided, turn-around times can be reduced, specific customized/segmented campaigns can be run, etc. This is a journey, and we continuously keep evaluating/exploring what more can be done to improve our customer and distributor experience.

[email protected]

Infrastructure Roadmap for

Digital Next

Summary: Public sector banks are transforming like never before during and post-pandemic times with digital transformation, I T i n f r a s t r u c t u r e d e v e l o p m e n t a n d security enhancements being their top priority.

Rajesh Kumar RamCIO, Bank of India

Lending


Breakthroughs in SME financing using AI & MLSaarathi, a digital lending marketplace, has more than 5000+ channels onboarded and 45+ lender codes on the platform:

Saarathi is f inancial services distribution platform that connects channels, customers and the product

providers with initial focus on lending. Saarathi is a digital lending marketplace. Manish Sharma, Chief Business Officer, informs: “We have 250+ APIs (Application Programming Interfaces), integrated on our platform from certified providers.”

NEW BANKS ADDEDSaarathi currently has 5000+ channel partners onboarded and 45+ lender codes on the platform. Manish updates: “We have onboarded 6 new clients this year. These include our credit solution deployment at our first ever PSU opportunity at IDBI Bank, current account solution with Federal Bank, as well as Kotak Mahindra Bank and our first ever loyalty product deployment with India1 Payments (formerly known as BTI Payments). We have witnessed 150% growth this year and we are aiming to achieve Rs600 million revenue run rate in FY22.”

BRIDGING SME CREDIT GAPAccording to estimates by the World Bank, India’s current loan shortfall for SMEs is roughly $380 billion. SMEs credit demand isn’t being met by the traditional banks & NBFCs. Manish claims: “Saarathi, is bridging this gap. We have AI-enabled digital lending platform, with MSMEs serving as one of the primary borrowers.”

Saarathi has direct LOS integrations with major banks and NBFCs, which allows complete digital file flow till sanction. It enables verified channel partners to send digitized loan applications with detailed risk assessment to lenders. Manish updates: “We have recorded platform disbursement upwards of Rs3 billion. All our data is stored in AWS India.”

Saarathi’s operations are spread across

north India. It currently operates in 12 clusters in north India. The majority of its business comes from Delhi NCR and a few cities in Rajasthan and Uttar Pradesh, informs Mahesh.

TRUST IN DIGITAL LENDING The RBI panel has recommended that the digital lending apps be subjected to a verification process by a nodal agency that will be formed in consultation with stakeholders. It has proposed for separate legislation to prevent illegal digital lending activities. Manish believes: “The recommendations made by RBI’s group is a significant step towards creating a safer digital lending ecosystem. We strongly believe that integrating protection of consumers and transparency into the digital lending landscape will significantly increase the number of people with access to formal banking and sources of credit, eliminating the informal players. The introduction

of regulations will help in curbing illegal activities and in building trust in the digital lending process thus helping the industry in the long run. Digital lending innovation is crucial for the country as it has the potential to address the credit gap, especially among MSMEs and the under-served population. Saarathi is ISO:27001 certified platform.”

REMOVING CHANCES OF FRAUDThe RBI panel has recommended that disbursement of loans should be directly into the bank accounts of borrowers; disbursement and servicing of loans will be only through bank accounts of the digital lenders. Manish feels this will be a great move towards creating a transparent and efficient lending process. “Servicing of loans through accounts of digital lenders who comply with the government guidelines will enable borrowers to get loans from credible sources thereby removing chances of any fraudulent activity. Saarathi takes an Aadhar based and OTP based consent from customers before fetching any data from its API partners,” he explains.

ENSURING DATA SECURITYThe thrust of the RBI panel’s report has been on improving customer protection and making the digital lending ecosystem more secure while encouraging innovation. Manish argues for the industry to ensure to stop this menace of illegal lending apps in the industry and explains how to increase cyber security and privacy for the customers. He advocates: “The digital lending industry needs to come together along with the government regulations that are going to be introduced in the upcoming bill to form standards that all the firms need to comply with. Making policies publicly available and setting up data storage centers in India will help in resolving discrepancies without resorting to any illegal activities, which

Manish Sharma would like to work on developing a SaaS-based lending system for banks


Saarathi process flow

has been the case with many lending apps operating out of China. Saarathi’s certified providers provide in-depth file analysis with complete data security.”

Data protection of customers has been a major concern across nations. Manish vouches: “A majority of credible digital lending platforms in India are already adhering to the government guidelines. The introduction of a regulatory bill will help in protecting consumer data, making it less prone to be used by countries, where data laws are not as strict as in India.”

APPLYING DATA ANALYTICSTechnology is a key enabler in providing access to timely credit to the underbanked and unbanked corners of the country as a majority of SMEs operate from semi-urban and rural parts of the country. Saarathi has gained by deploying analytics to do better CRM to increase business. Manish elaborates: “By altering the traditional SME lending process, technology is delivering breakthroughs

in SME financing especially with the integration of Artificial Intelligence and Machine Learning. Both structured and unstructured data are collected by the lender and applying data analytics helps in getting relevant information for the verification process. Data analytics can also help in customer segmentation to provide specific products for the customers as per their needs. It can also help in geographical segmentation, allowing lending businesses to serve people living in rural and semi-urban areas better.”

CLOUD DATA CENTERSOut of its total strength of close to 500 people, almost 80% strength is in IT and product. Manish states: “Being an ISO:270001 technology company, we have cloud data centers, located in India.” The loan servicing software is developed by Decimal Technologies.

LEAD GENERATION, BLOCKCHAINSSaarathi is gradually adding various

products on its platform. In the post-covid scenario, what are Saarathi’s targets and plans for IT, digital initiatives in the next few years? Manish reveals: “Our main focus is on digital lending, but we want to include loans, credit cards, insurance and more in our customer offerings. We also want to create lead generation platforms, blockchains for invoices, third-party integrations, and a variety of things within mobile apps. In addition, we would like to set up a direct lending system with banks to minimize the effort of creditor review and approval. We hope to extend our reach to banks and other financial institutions. We expect to build a business with annual sales of more than $100 million in the next 5 years, and for achieving this, we are actively hiring for leadership and managerial positions.”

FUTURE: VIDEO BANKINGSaarathi has plans for expansion. Manish indicates: “We are planning to expand to major clusters in south and west in the coming months.”

One of Saarathi’s projects aims to transform the entire future of banking into video banking. Manish adds: “Therefore we strive to reduce the need for fixed branches for banking and the physical presence of our customers and sales reps. We would like to continue adding new products for our customers in the next fiscal year. Additionally, we would like to work on developing a SaaS-based lending system for banks, developing a blockchain for invoicing, and reducing the difficulty of lending approval.”

[email protected]

Auditable logs for action on an app, a game changerGaurav Chopra, Founder & CEO, IndiaLends: We believe that recommendations such as auditable logs for every action that a user performs on the app, will be a game changer for India’s digital lending industry. It will demolish many existing loan sharks and curb unfair practices. Moreover, the recommendation for digital lenders to provide a key fact statement in a standardized format including the Annual Percentage Rate will give a better perspective to borrowers about the high percentage rate they are willing to bear. Overall, the report seeks to safeguard

consumers from unregulated digital lenders who have the potential to exploit borrowers with unfair or predatory terms.

AI, blockchain can ensure digital compliance is secureAnkit Ratan, Co-founder & CEO, Signzy: Most banking services are going digital but one key process that is still offline and hampers consumer experience is regulatory compliance. There is a pressure to dilute digital KYC, however digital has higher risk. We at Signzy believe that through a combination of artificial intelligence and blockchain, we can ensure that digital compliance is convenient, yet secure.

In the past year, there has been a drastic surge in digital lending, which has raised many question marks on the business practices of lending platforms. The new norms proposed by the RBI will significantly enhance how lending apps and platforms ensure customer safety and move away from unethical business conduct. Currently, the industry is seeing many unregulated digital lenders operating in the space, who do not even have basic KYC checks in place. We believe that if the recommendations are passed, it will not only help protect consumers but also restrict breaches of data privacy while curbing fraudulent transactions.

Customer Convenience


ATMs underused at IT parks & tech companiesATM transactions have recovered to 82% of pre-covid levels:

Covid hugely impacted transactions of ATMs as there were restrictions on movement of people. There

have been certain changes brought out by Kotak Mahindra Bank in areas of cash management, monitoring of ATMs in the last 2 years. The bank has managed and deployed cash efficiently on a regular basis during the said period. Kotak Mahindra Bank has a national footprint of 1612 branches and 2591 ATMs.

Puneet Kapoor, President, Products, Alternate Channels and Customer Experience Delivery at Kotak Mahindra Bank, informs: “To ensure uninterrupted services to our customers and for providing regular supply of cash to them, we launched ATM on Wheels in six major metro cities - Mumbai, Delhi, Bengaluru, Pune, Hyderabad, and Chennai. The vans were moved from society to society as per planned schedules. Additionally, sufficient cash balances were maintained in all Kotak branches and offsite ATMs so that customers did not face any cash outs.”

2ND WAVE IMPACTED ATM USAGEThe pandemic and subsequent

lockdown towards the end of March 2020 impacted the usage of ATMs. Puneet vouches: “Transactions picked up in the last quarter of FY21. However, the second wave again adversely affected the usage of ATMs. Currently, ATM transactions have recovered to 82% of pre-covid levels. ATMs placed at IT parks and in tech companies are still affected as a majority of employees continue to work from home.”

The regulatory landscape has recently changed with regard to deployment -replenishment of cash and levy of penalties. Puneet feels: “The introduction of recent regulatory mandates is loading the cost of overall monthly operating expenditures of ATMs.”

MICRO-ATM AT METRO’S OUTSKIRTKotak Mahindra Bank has recently undertaken measures to increase easy access to cash withdrawal. Puneet explains: “To deliver essential banking

services conveniently to a larger section of consumers living in relatively far-off areas, our bank has launched micro-ATMs across the country. Customers of all banks who possess a debit card can use a Kotak micro-ATM for key banking services such as cash withdrawals and checking account balances.”

KMBL is using its extensive BC network to use micro- ATMs. Puneet further states: “The BC could be a shopkeeper for instance, who will act as a convenient touchpoint for customers and assist them with the transaction. Using their debit card and PIN, customers can conduct transactions instantly through the Kotak micro-ATM. The micro -ATM is connected to the core banking network using the GPRS networks.”

Kotak’s network of micro-ATMs across the country will help customers of all banks get easy access to their bank accounts and promote financial inclusion. In the first phase, KMBL is introducing micro-ATMs in the outskirts of the top 8 metro cities –locations where the demand for cash withdrawal services is high but the prevalence of ATMs is low.

ATM PENETRATIONThe ATM penetration rate in India makes an interesting reading. Sharing a global perspective, Manjunath Rao, President, Managed Services, CMS Info Systems, points out: “The ATM penetration rate in India is significantly low, compared to countries like China, Mexico and Indonesia. In India, the under-penetration is more pronounced in the rural regions. Compared to the national average of 22 ATMs per 100,000 individuals, metropolitan regions have 26 ATMs per 100,000 population. However, the SU (semi-urban) RU (rural) region is severely under-penetrated, with a rate of 15 ATMs per 100,000 individuals. In the next 6 years, approximately 1.1 lakh new ATMs will be added, with most of them coming in the SURU regions.”

Public sector banks are resuming expansion of their ATM networks after a period of stagnation as evidenced by the recent increase in requests for proposals for ATM implementation. Rao expects that public sector banks will outsource more than two-thirds of their ATM managed services.

DIGITAL DEVICES PENETRATIONThe Payments Infrastructure Development Fund (PIDF) Scheme, operationalised by RBI from January 01, 2021, subsidises deployment of PoS infrastructure (physical and digital modes) in tier-3 to tier-6 centres and north eastern states of the country. From August 26, 2021, beneficiaries of PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi Scheme) in tier-1 and tier-2 centres are also covered.

Contribution to the PIDF is made by the Reserve Bank, authorised card networks and card issuing banks; the corpus currently stands at `6.14 billion. RBI has made a contribution of `2.50 bn towards this, followed by authorised card networks (`1.53 bn) and card issuing banks (`2.10 bn). The number of payment acceptance devices deployed under the PIDF Scheme as at end-September 2021 is 5,536,678 digital devices and 245,942 physical devices. Digital devices include inter-operable QR code-based payments such as UPI QR, Bharat QR, etc. Physical devices include PoS & mPoS (mobile PoS).

[email protected]

Puneet Kapoor points out that KMB is deploying micro-ATMs in the locations where the demand for cash withdrawal services is high


Credit@Click

Climbing digital steps with EASEPSB customers, active on mobile and internet banking channels, has increased y/y by 420 mn to 760 mn in quarter ended March 2021:

Credit@Click, a flagship initiative under ‘Enhanced Access and Service Excellence’ (EASE) 3.0

has proved to be very successful. Top 7 public sector banks (PSBs) have set up mechanisms. `55 billion of fresh loans for unsecured personal loans (UPL) and `1.24 bn of fresh loans for small credit were disbursed end-to-end digitally in quarter ended March 2021. This works out to 2X growth in unsecured personal loans and 10X growth in small credit loans compared to quarter ended March 2020. Nearly 0.44 million customers have benefitted through such instantaneous and simplified credit access, according to the annual report ‘PSB Reforms Agenda EASE 3.0 for 2020-21’.

LEADS GENERATED 24X7In FY21, PSBs have collectively disbursed `408 of fresh personal, home and vehicle loans through leads sourced from such digital channels.

PSBs have also extensively used external partnerships and dedicated marketing salesforce network for the sourcing of retail segment and MSME segment loans. Sourcing from such channels has seen 0.91 mn loans in FY21.

ANALYTICS, IT INFRAThe top 7 PSBs have built analytics capabilities through the set up of dedicated analytics teams and IT infrastructure to proactively offer loans to its existing customers. In FY21, `497.77 bn of fresh retail loan disbursements were made by the top 7 PSBs based on these credit offers.

CHANNELS & LANGUAGESThe base of PSB customers which are active on mobile and internet banking channels has increased from 340 mn in quarter ended March 2020 to 760 mn in quarter ended March 2021. Nearly 72% of financial transactions happening at PSBs in now happening through digital channels.

PSBs are now offering services across call centres, internet banking, and mobile

banking in 14 regional languages for the ease of customers. 96% of PSB branches now have at least one officer fluent in conversing in local languages in Q4FY21.

For continual improvement in coverage under financial inclusion initiatives, there was a 13% growth in transactions provided by Bank Mitras, Bank Correspondents in rural areas and 50% growth in enrolments in micro personal accident insurance in Q4FY21 compared to Q4FY20.

RECOVERY & EWSPSBs have adopted digital platforms such as online OTS, eBKray, e-DRT for expedited recovery. Nearly `40.68 bn value of assets recovered via e-listing on eBKray platform in FY21. `33 trillion loan book has been covered under EWS at the end of March 2021. Significant progress is seen across 6 themes of the reforms agenda, with the highest improvement seen in the themes of ‘smart lending’ and ‘institutionalising prudent banking’.

EASE 4.0: EMBED DIGITAL, DATAThe next edition of EASE reforms i.e. EASE 4.0 aims to further the agenda of customer-centric digital transformation and deeply embed digital and data into PSBs’ ways of working.

Under EASE 4.0, PSBs will offer new age 24x7 banking with resilient

technology.PSBs will offer digital and data-

enabled agri financing through measures such as agri loan initiation via digital channels such as SMS, missed call, call centre, internet and mobile banking. They will leverage partnerships with third parties and agritechs for alternate data exchange, end-to-end digitization.

PSBs will strive for improved access to doorstep banking services by promoting awareness and encouraging usage of such services and time-bound actions for service delivery. They will be promoting digital payments in semi-urban and rural areas through adoption of NFC, Bharat QR-based payment solutions, etc. to increase the use of digital modes of payment.

From different modes of staffing to remote working, 80,000+ bank branches were operational during covid-19. Additionally, there has been around two times increase in Aadhaar Enabled Payment System (AEPS) transactions through micro-ATMs, and enhanced doorstep banking support by 75,000+ Bank Mitras. To further support the customers in these times, the banks have drastically increased the number of services being offered at the call centres to 23 regional languages.

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Breakthrough achievement by PSBs across themes

Overall

Note: Average scores out of 100

Smart Lendingfor Aspiring India

Tech-enabledEase of Banking

InstitutionalizingPrudent Banking

Quarter ended March-20

Quarter ended March-21

Governanceand Outcome-

centric HR

Deepening Fland Customer

Protection

+35%

59.7

30.5

44.7 43.748.9

69.963.1

86.4

56.062.9

39.044.2

+46% +12%

+43%

+37%

+12%

Trends


Payment companies drive customization & hinterland expansionIn an exclusive chat Ketan Doshi, MD & CEO, PayPoint India & Nipun Jain, CEO, RapiPay discuss the current scenario & opportunities for payment companies in India:

Ravi Lalwani: In which regions of the

country are you seeing maximum

growth?

Ketan: We are witnessing strong growth across all the regions of the country; the demand is higher in the eastern and north-eastern states. We are also growing rapidly in some other states like Chhattisgarh, Uttarakhand, Odisha, Andhra Pradesh, and Telangana. In terms of types of territories, the semi-urban and rural locations have the maximum need for banking and payment-related services.

Nipun: We are doing well in all regions and have grown by more than 100% over last year. A couple of states which have done better are in North – J&K, HP & UP, South – Tamil Nadu, West – Maharashtra and in East – Bihar, Jharkhand & Tripura.

What ticket sizes are showing the

maximum growth?

Ketan: We are seeing growth in small-ticket transactions with the average size being in the `3000-5000 range. However, over the years, the ticket size is increasing, and the number of transactions is also increasing exponentially.

Nipun: We are witnessing an overall growth in ticket size by 12-15% in cash-out business (micro-ATM and AEPS) and domestic money transfer. At the business level, the ticket size is `4000. For micro-ATM transactions, it is around `3800 and for Aadhaar Enabled Payment System (AEPS), it is `2800.

How have you customized your payments

solution for different channels?

Ketan: We always customize our solutions and services to meet the specific needs of people. We have been adding new

services to meet the requirements of the under-served masses. As a result, we have a very large bouquet of services consisting of various banking products, payment products, ticketing services, insurance, loans, online booking of merchandise, etc. Customization and up-gradation are part of a continuous process in our company. With the increasing demand for various services, we have customized our products and created a robust and easy to integrate solution for all kinds of services. For the service providers who want to reach out to the hinterlands, ours is a plug-and-play solution that works real-time with 99.9% uptime.

Nipun: RapiPay is a fintech company in the assisted payments category. Our payment solutions are AEPS, micro-ATM and POS machines, and Pre-Paid Instruments (PPI).

AEPS solution is mainly preferred by small retailers whose customers use biometric and Aadhaar numbers for their cash withdrawals or payments. It is popular and very successful in rural India.

Micro ATM requires a debit card for cash withdrawal. Medium to large size retailer prefers micro-ATM devices. It’s more po pular in semi-rural and urban markets.

Our micro-ATM doubles up as MPOS machines and is used by mid-size retailers and retailers accepting card payments.

Please name some of your recent

bank partners.Ketan: Currently, PayPoint is in

partnership with State Bank of India, Bank of Baroda, ICICI Bank, PayTM Payment Bank, Fino Payment Bank, NSDL Payment Bank, TJSB Bank, Yes Bank, and Axis Bank.

Nipun: Today RapiPay has a strong relationship with most of the banks for various services it offers to the consumers. We are already a corporate business correspondent to more than 7 banks and depending on the type of products/services offered, we continue to partner with leading banks, NBFCs, and other related financial players. Our focus is to work with banking partners in improving the customer experience at the ground level by ensuring successful and transparent transactions and services.

How are you deepening your

engagement with banks?

Ketan: Over the years , the partnership between banks and PayPoint has become stronger, thereby, accelerating financial inclusion in a big way. PayPoint has been able to take the

Ketan Doshi predicts growth of payment-related services in the semi-urban & rural locations


Nipun Jain favors automating the reconciliation process for a huge volume of transactions

banking services of various banks to the most remote places, be they in Arunachal Pradesh or Mizoram or any other state in the North-East or even in the naxal infested areas of Chhattisgarh, Madhya Pradesh, Maharashtra, Jharkhand, and Odisha. Our expertise in expanding the distribution network to the farthest locations in the most difficult terrains has enabled the banks to take banking and social security services to the hitherto financially excluded people living there.

We have already opened around 3.5 million bank accounts which we service almost exclusively at our outlets for most of their banking needs. Recently, we have started a loan lead generation service for many banks and NBFCs.

Nipun: Fintech companies and banks complement each other. We extend banking and financial services to end consumers by partnering with some of the leading Indian banks. They are our banking partners for AEPS and micro-ATMs. Our transactions volume and value have grown by more than 200% in the last year. A healthy growth like this has strengthened our relationship with the banks and they are excited about the future potential of the business with us.

We have worked closely with banks in ensuring smooth onboarding of channels (today more than 85% of our channels are onboarded in 5 minutes), ensuring transaction speed while building scale, being compliant with the guidelines, and helping banks in faster resolution of grievances.

What are the most common problems in

reconciliation and settlement, and how

is the company fixing them?

Ketan: As we have more than 125 service providers partnering with us, reconciliation and settlement are crucial functions for us. We have a 3-way reconciliation system that is largely automatic and computerized. The discrepancies are captured quickly before the settlement process begins.

Nipun: At our scale, the high volume of transactions is the biggest problem faced during reconciliation and settlement. To mitigate the issue, daily

reconciliation is important. It helps in minimizing the financial losses due to any bugs or errors in the product. We are automating the reconciliation process, which is not that easy but is a great way to handle a huge volume of transactions like ours.

What changes have you made in your

IT infrastructure in the last 12 months

to enhance scalability and business

continuity?

Ketan: Changes in IT and its up gradation are an ongoing process at PayPoint. Cutting-edge technologies, such as artificial intelligence and machine learning, have helped us in analyzing customers’ requirements and quick digital adoption across the country. We have used boat system in Assam, during floods, one of the Bank Mitras of PayPoint got onto a local boat carrying all his belongings, including a laptop, printer, biometric device, dongle, etc. Every morning for over 6 kilometres, he sailed across the Brahmaputra River to cater to the banking needs of the poor people trapped in inundated villages. The efforts were applauded by the government of Assam and government of India.

System has been implemented to resolve queries in real-time without any human intervention. MIS is extremely important to us and therefore, we have recently upgraded it by adopting the latest and most versatile MIS tool. A robust, quick, and easy-to-use KYC system is of vital importance to us. Therefore, we have put in place an XML-based Aadhaar eKYC solution that gets us the authenticated KYC data in seconds.

Nipun: Technology is the backbone of our business. Our IT infrastructure has grown manifold in last year. Our team size is 3 times what it was last year, and our IT team has been constantly working towards providing a great product experience for our consumers and partners.

As we are on a growth trajectory and have plans to launch more products, we have reorganized our IT teams on basis of business verticals, and this is further bifurcated into the development team and maintenance team (basis the business maturity). Also, to ensure that there is cross-functional knowledge exchange and better team synergies, these teams are made to be fungible. Our tech stack is also being further developed and strengthened to ensure commonality, wherever possible, across business functions to ensure convenience to the consumers.

Some of the new initiatives in technology we have introduced to make our systems robust while scaling up the business are: u AI-based facial recognition and

liveliness check, face matching of profile pic with KYC Video.

u Automated Credit Processing: Rule-based and scorecard-based risk profiling and underwriting (for RapiPay’s digital lending vertical).

u Weightages calculation for score carding, knock out and deviation rules.

u Dynamic business rules and workflow engine.

u Machine learning-based fraud d e t e c t i o n a n d i d e n t i t y / r i s k management.

[email protected]

EWS


Identifying Unusual Early Warning Signals

Banks have always been keen to protect its interests in maintaining their books clean

and in the process keep trying their best to issue guidelines through circulars and train, repeating their ways to put checks on creditworthiness of the accounts to proactively lend an ear to the alarm bells ring.

There are several easily identifiable and known EWS which every corporate banker can easily point out to - such as LCs devolvement, BG invocations, cheque returns, slow-moving inventory, bad debts, frequent irregularities, project extensions, etc. But most of these can be termed under lagged data. Bankers need to react to the lead indicators and not on the lagged data. This article focuses mainly on some unusual EWS for detecting NPAs, some of which are usually missed even by experienced corporate bankers. Bankers neither need to be detectives nor investigative journalists. But a tingling sensation needs to crop up whenever there is a chance of a delinquency. Let’s examine two such unusual EWS.

1. Steep decline in power bills in a

manufacturing plant

This information can be sourced from site visits / inspections (power bills) and also quarterly financial reports. Credit specialists usually do not focus on data collected by bank’s field staff, which is very much understated, but is extremely powerful. One such example is power consumption data which is not paid attention to on periodic basis or even if a drop identified, is brushed aside by assuming it as maintenance works. Inspection officers are different from credit analysts and bankers may sometimes fail in connecting such dots. As long as sales, profits, stocks, receivables for those month / quarter endings do not reflect an anomaly, the typical banker will not be alerted. But little do they understand the impact. For instance, if a car manufacturer makes about 1500 cars a day, with $40,000 average cost per car, a day’s

power-out would cost the company $60 million in the top-line. There exist several manufacturing activities wherein equipment such as furnace will take considerable time to restart and return to normal activity, impacting the production levels.

As you read this, China is presently grappling with power-cuts and the impact on industry is expected to be significant, which will come to light in Q1 Y22. Hence, any manufacturer not running for a month in a year, except backed with clear reasoning, can have a huge impact on the financials. In such a situation, if the company could still make up the top-line for the previous year, it may be generating revenues through an alternative route of trading in the raw material and hence caution should be exercised.

Required Due diligence: For certain shortlisted customers within your portfolio, collect and scrutinize the trends in power bills and payments by liaising with the inspection officials.

2. Ratio of raw material, stock in process,

finished goods, receivables, creditors

and sales trends change compared to

the usual trends

Stock statements are usually submitted at monthly intervals for calculation of drawing power by the Indian banks. These are usually not utilized to the full extent usually by the credit analyst while performing review during the year. As we know, value is locked within the operating cycle or as temporary cash balances and any disproportion among these items may indicate diversion of funds or inherent hiccups. Ratio of these items furnished in the stock statement can indicate very insightful observations such as (i) Pile-up of RM, WIP indicating incidence of hiccups in the manufacturing process (ii) Pile-up of finished goods inventory indicating low demand (iii) Delay in realization of receivables or (iv) Decline in credit for purchase of raw material. Each of these is a serious issue and they indicate a troubled account in the making, which have to be delved deeper into for action by the banker.

Required due diligence: Trends of stocks, receivables, creditors and sales to be maintained and compared with half yearly & yearly financials to identify any disproportions which may impact the credit. This above should also be compared with the credits and debits in the account, which can reveal plethora of insights about the company’s performance.

These above early warning signals may always not be actual warnings about creditworthiness, which is signified by the word ‘signals’ in this term. They may just be false alarms, but it is better to attend to them rather than ignoring if it is an actual warning signal. Nipping the incipient stress in the bud will improve the chances of rescuing the account from turning bad in the future. For this to happen, bankers need to keep reminding themselves that ‘Devil lies in the details’.

N Sai Animesh Kumar works at Ahli United

Bank, Kuwait. [email protected]

N Sai Animesh Kumar highlights the risk of companies maintaining their topline through trading rather than manufacturing


Investing

A platform for fixed income investment optionsBondskart.com is a fully customized platform offers functional efficiency and is available in web and on mobile app:

JM Financial is one of India’s prominent financial services groups, specializing in providing a

spectrum of businesses to corporations, financial institutions, high net-worth individuals, and retail investors. Asset management, Wealth management, and Securities business (Platform AWS) of JM Financial provides an integrated investment platform to individual clients and includes wealth management business, broking, PMS, and mutual fund business. JM Financial has integrated the Platform AWS businesses to focus on individual customer segments’ investment and savings needs. The Platform AWS business is actively investing in various digital initiatives to enable rapid growth and top-quality customer experience.

The platform, meant for customers desirous of RBI Direct Retail Scheme, is in the early stages of adoption by JM Financial. Ajay Manglunia, Managing Director & Head - Institutional Fixed Income, explains: “We have been meticulously marketing this platform to our investors and the response has been fantastic to say the least. Our guess is that most of the fixed income investors would like to on-board and deal on this platform of direct access. We will be in a position to collate the specific contours of the platform after some time has elapsed.”

LIKING FOR LIQUID PAPERSThe platform is security agnostic and the entire universe of traded Government securities including Gsec, SDL (State Development Loan) and SGB (Sovereign Gold Bond), have been made available to retail investors for both primary and secondary trades. Ajay updates: “From the preliminary discussions that we have had with the investors, it can be said the proclivity has been towards the

benchmark liquid papers.”

GOOD FOR LONG TERM INVESTORThe investor class encompasses a diverse range of investors including salaried, self-employed and business owners. Ajay advises: “The main target segment here would be individuals looking to invest in government securities or risk-free securities for regular cash inflows or coupon. While this may apply to almost all categories of investors, Gsec and SDL are good instruments especially for long term investors like senior citizens, retired individuals and NRIs, who wish to lock into long term interest rates for regular income with minimum risk and income fluctuation.”

IN-HOUSE ANALYTICSJM Financial has recently launched a retail bond platform Bondskart.com, which aims to become a go-to platform

for both retail as well as HNI investors, who wish to invest in corporate debt instruments. Ajay elaborates: “Bondskart.com features diverse 360-degree fixed income investment options across rating categories, yields and instrument types such as plain vanilla bonds, sub-debt/ tier 2 & perpetual bonds, aided by in-house analytics and data driven technology platform. The fully customized platform runs on minimum human intervention, offering excellent time and functional efficiency. It is available on web as well as on mobile app - on Android as well as iOS.”

MANY PROSPECTIVE CUSTOMERSJM Financial has already taken efforts to make its customers aware to take benefit of the retail direct platform so that they could participate in primary issuances and secondary market trading of all kinds of government bonds. Ajay states: “With a sizeable number of retail, HNI and similar individual investors being catered by our group, we expect a sizable number of our customers to take benefit of the RBI Direct access platform.”

QUERIES FROM INVESTORSTo reiterate, it is still too early for JM Financial to comment on the numbers or the volume of transactions involved. Ajay argues: “If we were to look at the broad numbers, the government securities segment is at the moment completely dominated by institutional and large investors. The aim here would be to at least be able to make the retail investors significant participants in this segment in the short to medium term (double digit numbers in terms of holders of security). We have been getting a lot of queries from our investors regarding the platform and we are highly optimistic about the success of this initiative.”

[email protected]

Ajay Manglunia is highly optimistic about the success of the RBI Direct access platform

Fintech Lenders


Digital Transformation key to all business offeringYashoraj Tyagi, chief technology officer, CASHe, and Bhavin Patel, Co-founder & CEO, LenDenClub, explain factors responsible for the growing segment of Fintech lenders:

Mumbai-based LenDenClub is India’s first P2P lending company, hosting investors and

borrowers to integrate with a tech-based distribution network to avail last-mile connectivity. It leverages technology to support borrowers.

LenDenClub has partnered with agencies having offline distribution networks to bring them into the digital fold. Bhavin Patel, Co-founder & CEO, informs: “With the partnership, customers visiting a nearby Vakrangee Kendra can now seamlessly lend and borrow through LenDenClub. Vakrangee, through its Nextgen Kendras and BharatEasy app, will now offer lending and borrowing facilities even in the remotest parts of the country. With 70% of Nextgen Vakrangee Kendra outlets, situated in tier-5 and tier-6 towns, the partnership will aid in new-age borrowing and lending permeate inner cities and remote rural towns across the country. The partnership will thus offer easy access to a large section of the unserved/underserved populace who otherwise have no access to formal credit.”

CASHe is a technology-first fintech lending company, where digital transformation and initiatives are key to all areas of its business offering. Being a fintech company, it fundamentally changes how it operates and delivers value to customers. Yashoraj Tyagi, chief technology officer, claims: “Through our tech-led initiatives in the financial ecosystem, we have successfully been able to democratise financial services by making credit available to hundreds of thousands of new-to-credit and the underserved segments of the population.

Hence technology is core to what we do and is deeply interwoven into nearly all components of our business model.”

LEVERAGING MICROSOFT TECHApart from in house technology developed on Python and React platform, LenDenClub, is selected under ‘Microsoft for Startups, a global program dedicated to accelerating the growth trajectory of high-potential startups. Patel points out: “The engagement is helping LenDenClub leverage Microsoft’s technology and innovation to build a robust tech ecosystem and reduce NPAs to less than 1%. This came at a time when LenDenClub has been consistently achieving the lowest NPAs in the industry.”

Additionally, the technology-backed program will aid in further accelerating the company’s future growth plans in expanding its market footprint while tackling operational bottlenecks, including fraud. Patel adds: “We will use Microsoft Azure’s comprehensive AI/ML capabilities to reach a wide-scale audience in a short time, with built-in redundancy and security. Apart from technology, the platform will provide us access to Microsoft’s network companies spread across the country and the globe, for collaborations, mentorship and business support.”

SOCIAL LOAN QUOTIENTCASHe has very robust credit lending system in place that is completely focused on automation. Yashoraj explains: “The Social Loan Quotient, an AI-based algorithm developed in-house, assesses the risk of a borrower based on the users social and mobile data footprints. The model goes beyond traditional credit-risk metrics and assesses the goodness quotient in the borrower and the ability to repay.”

CASHe is challenging the status quo and offering a viable and affordable alternative to traditional banking channels for accessibility to financial products to its customers. Yashoraj further says: “Our out-of-the-box business model leverages technology to deliver financial services in a cost-effective, swift and convenient manner. We operate in a digital world that surpasses that of a high-touch model in terms of scalability and have thus used a combination of artificial intelligence and big data to eventually build an engine that trains, learns, adapts and predicts human behaviour, which otherwise is a monumental task.”

Bhavin Patel reveals that LenDenClub uses advanced data intelligence regarding servicing and collection to make default forecasts


Yashoraj Tyagi informs that CASHe has embedded its platform in leading payment, telecom, and financial platforms

ANALYTICS TOOLSThe tech platform has helped LenDenClub to identify the right set of borrowers and lenders, leading to controlled NPAs in the company. Patel indicates: “With the integration of modern technology and analytics tools, onboarding time has been reduced.”

It is vital to employ analytics to improve marketing at every stage of the customer journey starting from onboarding them on the platform. Yashoraj affirms: “We employ the right technological infrastructure to bring together valuable insights from customer data, obtained from multiple sources to improve the efficiency of the marketing spends. For instance, at the top of the funnel, multiple data points both internal and external are leveraged to predict the propensity of customer to take the next action & their interest in the offering, in addition to the inherent risk associated with each customer. This allows us to direct our marketing spends towards individuals who are most likely to respond. Similarly, data and customer analytics used to create customer personas and segments based on risk, propensity, demography, and behaviour help define a more personalized customer experience. This is key to optimize customer engagement, improve retention & loyalty, and increase performance of marketing campaigns. The ability to put structure to all the above activities aids in process automation which allows us to

build for scale, increases productivity and gives us a powerful advantage.”

MARKETING ON SOCIAL MEDIASocial media is a critical channel for CASHe to increase its user base as well as promote its products with the target audience. Yashoraj says: “Around 30% of customer acquisition happens though social media platforms. With a sizable budget allocated for marketing spends on the social media, we primarily use this

medium to conduct marketing activities including announcing offers, product launches, run promotional ads and employ many other innovating strategies like influencer marketing and release product specific marketing videos that increase engagement and subsequently result in increased user adoption of the service.”

ENHANCING DIGITALIZATIONAs the economy rebounds post-pandemic, the critical priority for P2P lending credit managers is to build a sustainable lending environment with enhanced digitalization, both for strategic partnerships and services. Patel clarifies: “We strive to use advanced data intelligence regarding servicing and collection to make pre-emptive default forecasts based on customer repayment behaviour, account insights, and web and digital habits.”

Most market players acknowledge that black-swan events like covid are likely to become more regular in the future and that organizations should become more robust and resilient to mitigate the impact of such catastrophes. Patel feels: “Lending organizations now have a chance to restructure their operational models and emerge as contemporary, powerful, and lean entities attuned to overcoming future challenges.”

Even before the pandemic hit, CASHe was on track to outpace competition in terms of investing considerable capital to scale up its IT infrastructure and hiring the right talent. Yashoraj underlines: “We invested in cutting-edge technology that helped us to scale our platform. We developed the roadmap for the future by determining what capabilities the platform will need to remain competitive and innovative in the coming years. Hence, cloud technology has become central to our transformation efforts. As part of our digital expansion initiatives, we have embedded our platform in some of the leading payment, telecom, and financial platforms to seamlessly offer credit to a larger customer base.”

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Payments


ICICI Bank, Axis Bank thrive on API, UPI, PlatformsWhile Bharat Bank unit of Axis Bank will offer tailored rural products with increased physical & digital reach over the next 3 years, ICICI Bank has created 19 industry specific stacks to provide digital solutions to corporate clients:

ICICI Bank has partnered with Amazon India to offer instant overdraft to sellers, including non-ICICI Bank

customers, on its portal. The bank is focusing holistically on the merchant ecosystem, both directly and through partnerships. Sandeep Bakhshi, MD & CEO, said in Q2 investor presentation recently: “The Super Merchant current account, which offers various benefits such as digital account opening and instant overdraft facilities based on point-of-sale transactions, has received good response from customers. The bank has also launched an instant overdraft facility for MSMEs registered on the GEM Sahay application through API integration with the OCEN network.”

Axis Bank has partnered with BharatPe to expand its merchant acquiring business. Amitabh Chaudhry, MD & CEO, informed: “We have launched a wide range of open API (Application Programming Interface) banking solutions, covering 200+ retail APIs and 51 corporate APIs.”

With Axis Bank’s focus on Open Banking initiatives as part of the digital strategy, it is committed to simplifying customer journeys and bringing greater convenience through constant innovation in its offerings. Sameer Shetty, President & Head, Digital Business & Transformation at Axis Bank, said: “With these latest API Banking offerings, we look forward to collaborate and co-create with partners, to offer an enhanced user experience and simplify their day-to-day operations.”

UPI GROWTH: RETAIL DIGITALIn the Unified Payment Interface (UPI) space, ICICI Bank’s strategy is to participate directly through the bank’s

own platforms as well as partner with third party players, in both the peer-to-peer and payment-to-merchant segments. Sandeep explained: “The value of our bank’s merchant acquiring transactions through UPI more than doubled y/y and grew by 34% sequentially in Q2, 2021-22. The value of transactions through the ‘Pay to Contact’ feature, which enables users to easily transfer money to any payment app or digital wallet via UPI, is about 3X higher in September 2021 compared to June 2021.”

Axis Bank continues to remain among the top players in the retail digital banking space in Q2FY22. Amitabh updated: “Our y/y growth in total UPI transaction value is 147%. Our market

share in UPI transactions stands at 15%. Share of digital transactions in the bank’s total financial transactions by individual customers is 91%. Saving accounts opened through tab banking is 71%. Y/y growth in mobile banking transaction volumes is 69%, with market share of 14%. Retail term deposits (by volume) opened digitally in H1FY22 is 67%. New mutual fund SIPs sourced through digital channels in H1FY22 is 48%.

PLATFORMS: CLOUD, SUPPLY CHAIN The digital platforms like ICICI Bank’s InstaBIZ offer various services such as instant overdraft facility, payment of GST, foreign exchange deal booking, business loans based on revenues reported in GST returns, automatic bank reconciliations and inward and outward remittances. Sandeep stated: “The business banking and SME franchise continues to grow on the back of digital offerings and platforms like InstaBIZ. The value of financial transactions on InstaBIZ has grown by about 80% y/y in Q2,2021-22.”

Axis Bank’s focus remains on reimagining end-to-end journeys, transforming the core and becoming a partner of choice for ecosystems. Amitabh pointed out: “Our bank has taken a cloud-first approach for its digital banking platform having deployed all new customer facing applications on cloud platform since last year. Along with Freecharge, the bank scaled up engagements for its Buy Now Pay Later (BNPL) product with 14x q/q growth in number of customers acquired during the quarter.”

ICICI Bank’s supply chain platforms enable corporates to seamlessly manage their supply chain financing and

Amitabh Chaudhry reveals that Axis Bank has crossed 1.9 mn customers on WhatsApp Banking within 9 months of launch


Sandeep Bakhshi reveals that the value of transactions through Pay to Contact feature is 3 times higher q/q in September 2021

payments, collection and reconciliation requirements of their dealers and vendors in a convenient and paperless manner. Sandeep updated: “The bank has onboarded about 200 corporate customers on these supply chain platforms. About 70% of the dealers of these customers are active on the supply chain platforms. The value of transactions through these platforms increased 4.7X y/y in Q2, 2021-22.”

MOBILE TRANSACTIONS UPIn December 2020, the ICICI Bank had expanded its state-of-the-art mobile banking app, iMobile, to iMobile Pay which offers payment and banking services to customers of any bank. “There are about 1.5 millon activations of iMobile Pay from non-ICICI Bank account holders in Q2, 2021-22, taking the total such activations to 4 million within 9 months of launch. The transactions by non-ICICI Bank account holders in terms of value and volume respectively, are 3 times and 13 times higher in September 2021 compared to June 2021,” Sandeep added.

The value of mobile banking transactions at ICICI Bank is going upwards. “It increased by 62% y/y to Rs4 trillion ($54.8 billion) in Q2, 2021-22. Digital channels like internet, mobile banking, PoS and others accounted for over 90% of the savings account transactions in H1, 2021-22,” added Sandeep.

Amitabh updated: “We crossed 1.9 million customers on WhatsApp Banking within 9 months of launch.”

CONTACTLESS PAYMENTICICI Bank continues to expand the suite of services offered through iMobile Pay to achieve high engagement levels with users. Recently, the bank launched a facility which enables its savings account holders to manage dues of credit cards of any bank through iMobile Pay. Sandeep updated: “The bank has also launched a contactless payment facility on iMobile Pay which enables users of android based smartphones to make credit and debit card payments on POS terminals in a safe and secure manner by tapping their phones.”

ICICI Bank is the market leader in electronic toll collections through FASTag. Sandeep said: “Our bank had a market share of 37% by value in electronic toll collections through FASTag in Q2-2022, with a 63% y/y growth in collections.”

CORPORATE CLIENTSICICI Bank had launched ICICI STACK for corporates and has created 19 industry specific stacks, which provide bespoke and purpose-based digital solutions to corporate clients and their ecosystems. “The volume of transactions through these solutions grew 2.4X y/y in Q2, 2021-22. These solutions along with the depth of the bank’s coverage have supported the strong growth in average current account deposits,” added Sandeep.

DIGITAL REACH FOR RURALAfter the success of its Deep Geo initiative, the Axis Bank has created a distinctive growth-focused Bharat Bank unit. Amitabh added: “This unit will offer tailored rural products with increased physical and digital reach across branches over the next 3 years.”

SEAMLESS ON-BOARDINGMortgage disbursements of ICICI Bank in Q2, 2021-22 were close to the level seen in the quarter ended March 31, 2021. Sandeep indicated: “This is reflecting the increase in demand coupled with the bank’s seamless customer onboarding experience through pre-approved offers and digitisation. Disbursements of personal loans and auto loans were also close to Q4, 2021 levels.”

CARD SPENDSSpends across most categories other than travel in case of ICICI Bank crossed March 2021 levels in September 2021. “The value of credit card spends grew by 47% sequentially in Q2-2022, 2021,” Sandeep added.

VIRTUAL CENTRESAxis Bank has a network of 4679 domestic branches and extension counters, 10,970 ATMs and 5893 cash recyclers spread across the country as on 30th September 2021. Amitabh stated: “The Axis Virtual Centre channel has 6 centres with over 1500 Virtual Relationship Managers (RMs) as on 30th September 2021.”

[email protected]

Fresh Perspectives on Marketing

Summary: Learn about the new ways of doing business, generating revenue, and controlling/reducing costs.

Anurag ShivaDGM - Alternate Distribution Channel & Digital Marketing, Bajaj Auto Finance

Cooperative


PACS will be integrated with the CBS of DCCBs NABARD has earmarked `50 billion for enabling PACS to be a key player in the agri-value chain by turning them into multi service centers:

NABARD has supported financial literacy efforts through various initiatives keeping in mind its

importance to augment demand for financial services, especially for those offered on the digital platform. In addition, in order to augment the supply side of the financial ecosystem, NABARD has also extended support for onboarding to digital platforms, improving connectivity and meeting regulatory requirements. The Financial Inclusion Fund (FIF) housed in NABARD is mandated to support developmental and promotional activities with a view to securing greater financial inclusion.

Shaji K. V., Deputy Managing Director, explains: “In order to address the regional disparities, a differentiated strategy involving more thrust on backward districts that are constrained by various physical, economic and sociological characteristics, now termed as the special focus districts (SFDs) was adopted, to provide focused FIF interventions and bring about inclusive and equitable financial inclusion across the country. Under this, grant support was enhanced to 90% for banks in these SFDs comprising of aspirational districts, LWE districts, north-eastern region (Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura), hilly states (Jammu & Kashmir, Himachal Pradesh and Uttarakhand), Lakshadweep and Andaman & Nicobar Islands. During 2020-21, 50 more credit deficient districts were added to the list of SFDs, which now stands at 358 districts.”

LOW-COST CLOUD-BASED MODELNABARD has given focused attention for technology upgradation of the rural cooperative credit system in the country. The project for onboarding the top 2 tiers of the rural cooperative credit system viz., the state cooperative banks and district

central cooperative banks, has resulted in accelerated adoption of technology by these cooperative banks.

It was the first time that a low-cost cloud-based model was used, which provided all the benefits of CBS without the need for heavy investment and ownership by these cooperative banks. Shaji explains: “We are now at a point where all the 381 licensed rural cooperative banks are all on the CBS platform and interlinked through RBI’s payment gateways. Now NABARD’s attention of is now focused on the third tier of the rural cooperative credit system viz., Primary Agriculture Credit Societies (PACS), which are the building blocks of the country’s cooperative banking structure. Going forward, NABARD will be actively partnering with both central and state governments to handhold PACS for technology adoption. As a prelude,

NABARD has implemented a matching grant-based scheme of `50 million per state for computerization of PACS by FY23. Under this scheme, integration of these PACS with the CBS of DCCBs will be done to ensure seamless flow of credit and digital payment services at the cutting-edge level. NABARD has also earmarked `50 billion for enabling PACS to be a key player in the agri-value chain of the country by turning them into multi service centers to cater to the post and pre-harvest needs of farmers.”

DIGITAL LITERACY PROGRAMSThere are certain schemes under implementation for financial and digital literacy awareness programs through bank/FLCs.

Financial literacy is an important tool for creating demand for financial products, especially in rural areas. It helps to create awareness about access to financial services, their features and availability as well as develop responsible financial behavior with the help of appropriate financial knowledge. NABARD has extended support to banks for conducting targeted digital and financial literacy awareness programs (for people newly inducted in the financial system, adults, specified groups and digital financial literacy) in rural areas through their Financial Literacy Centers (FLCs) and rural branches.

The maximum eligible grant support extended for conduct of financial and digital literacy (FDL) programs in SFD is ̀ 6000 and Rs5000 in other districts. Shaji updates: “As on 31 March 2021, an amount of ̀ 4.29 billion was sanctioned and Rs2.18 bn was released for conduct of more than 0.43 million financial literacy programs. During FY 2021-22 more than 0.15 mn financial literacy programs are planned to be conducted.”

DUAL AUTHENTICATION Dual Authentication is facilitated at BC

Shaji K. V. Updates that NABARD has allocated `460 mn for deployment of micro-ATMs for the current FY


(Business Correspondent) points for SHG transactions. In order to facilitate SHGs to seamlessly operate at BC points with the dual authentication feature, the scheme supporting scheduled commercial banks (SCBs) and RRBs was in operation since 2018-19. Shaji informs: “As on 31 March 2021, ̀ 10.8 mn was sanctioned to 20 banks and `7.8 mn was disbursed to 13 banks under the scheme.”

ONBOARDING TO BHIM UPI NABARD extends support to RRBs and rural cooperative banks (RCBs) to service their large rural clientele through mobile-based banking using Bharat Interface for Money (BHIM). Shaji elaborates: “This has enabled their clients to conduct real time banking such as transfer of money and payment to various product and services digitally. As on 31 March 2021, an amount of `27.3 mn was sanctioned to 55 banks and `18 mn was disbursed to 36 banks under the scheme.”

PFMS FOR WELFARE SCHEMES The objective of Public Financial Management System (PFMS) is to facilitate direct benefit transfer (DBT) to flow to rural people for various government welfare schemes through rural financial institutions (RFIs). As RCBs are essential part of rural financial ecosystem, this scheme helps the rural population to operate their accounts nearer to their place of residence. Shaji updates: “As on 31 March 2021, an amount of `89.3 mn was sanctioned to 325 banks and `76.1 mn was disbursed to 277 banks under the scheme. At present 43 RRBs and 326 RCBs have been on-boarded on PFMS.”

MICRO ATM ON TAP TO BCNABARD has undertaken a number of initiatives during 2021-22 and measures are being taken post covid-19 pandemic. Technology penetration in rural areas is an important factor for enhancement of banking reach and affordability. Technology-based banking has become more significant in the current times and will be so in future also. Certain areas have been stressed upon in the post covid period by the banks.

Micro-ATMs have led to an increase in banking transaction points.

To enable creation of banking touch points in a viable way for banks and convenience for the customers, micro-ATMs are playing a major role in financial inclusion and delivery of financial products in remote areas. Shaji informs: “Micro ATMs are provided on tap to BCs of RRBs and PACS and other societies of RCBs hitherto. Now, the scheme has been extended to all banks to place micro-ATMs at milk societies and SCBs and RRBs in schools and colleges. For the current financial year, Rs460 mn has been allocated for deployment of micro-ATMs.”

DEPLOYMENT OF POS/MPOSUnder FIF, NABARD gives support for deployment of POS devices to be provided to local merchants through banks to enable the rural population to conduct digital transaction at local merchant establishments at par with urban population. Shaji reveals: “We are targeting at a disbursement of ̀ 1.10 billion for deployment of POS/mPOS in tier 3 to tier 6 centres.”

GREEN PINBanks have taken various initiatives for distribution of RuPay cards to farmers. However, efforts have to be taken to increase the activation of these RuPay cards by increasing the number of activation-points apart from the ATMs. Shaji says: “We have introduced support for green PIN facility. NABARD reimburses one time implementation and application development cost for enabling green PIN for RuPay Kisan Card facility at ATMs and/or micro-ATMs of the bank.”

V-SAT, MOBILE SIGNAL BOOSTER The rural areas suffer from lack of dependable telecom connectivity. It is essential that the banking touch points have good connectivity for smooth operations. Shaji states: “NABARD extends grant assistance to banks for setting up of solar-powered VSATs. As an alternative to VSATs, grant support is also being granted to deploy mobile signal boosters in areas with intermittent telecom connectivity.”

PURCHASE ON REIMBURSEMENTNABARD extends grant assistance to

all rural branches and FLCs of SCBs, licensed RCBs and RRBs for purchase of handheld projector with battery, screen and speakers on a reimbursement basis, as ‘one-time’ grant. Shaji says: “Support for purchase of handheld projector including costs of battery, screen and speakers at maximum `30,000 per branch/FLC is being extended to the rural branches and FLCs of SCBs also.”

LINKING MERCHANTS -BANKS Bharat Bill Payment System (BBPS) offers integrated, accessible and interoperable bill payment services to consumers across geographies with certainty, reliability and safety of transactions. This centralized bill payment system caters to the needs of all segments of consumers & customers across various categories of bill payments. BBPS acts as a single bridge for putting together all the vendors. Shaji advises: “Banks may onboard to this platform to provide bill payment services to their customers as it provides ease of linking merchants and banks on one platform.”

KIOSKS IN VILLAGES OF NER: BC model is the cornerstone of India’s financial inclusion strategy to ensure delivery of banking services across the country. Shaji points out: “However, despite the progress in terms of geographical outreach, significant challenges remain in establishing BC services in north eastern states, with 39% of their villages, having a population of less than 500. Hence, NABARD is now extending support to SCBs and RRBs for setting up kiosks in these unbanked locations.”

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Cooperative


Moving swiftly to adopt technology and expand servicesTelangana based co-operative bank is planning to increase its average digital transaction count to 0.2 million by end of 31st March 2024:

In recent times, Indian banking has seen major technological and financial innovations. For a small co-operative

bank like Gayatri UCB, it is a big challenge to implement these innovative services. Vanamala Srinivas, CEO, informs: “Despite that, we accepted the challenge. We have launched mobile banking, IMPS, ATM services, POS, e-Com, RuPay platinum cards, RuPay EMV card services, tollfree banking, kiosk banking, RTGS/NEFT, NACH and CTS clearing services, UPI, BC points, etc.”

The bank levies no charges on RTGS/NEFT, no charges on mobile banking & IMPS services, no SMS charges, no charges for non-maintenance of minimum balance and no loan processing charges. Srinivas claims: “As such we are providing best technology enabled services on par with corporate and commercial banks in India.”

SPECIAL ATM FOR WOMENGayatri Bank established dedicated ATM for women at Jagtial branch in 2013. Only women are allowed to transact with this ATM, which is placed separately. Srinivas vouches: “There is a high response for this ATM. Because of the positive response we added one more ATM dedicated to women at Jagtial branch in 2020. Women customers are feeling very happy with the establishment of special ATM, by which they can comfortably withdraw cash quickly. Daily 483 women are taking cash from this ATM on an average.”

ATM transactions count recorded in current financial year as of October 2021 is 2.56 million, against 3.62mn as of the last FY. Srinivas assures: “We are also planning to introduce special ATMs for women cardholders at all remaining branches in near future. We are also planning to launch contactless cards.”

IT VENDORSPrior to 2007-08, banking operations of

Gayatri Bank used to be done manually. The bank has rapidly adopted the latest technologies to provide the convenient and user-friendly services to its customers Srinivas elaborates: “Computerization started in the FY 2007-08 with the DOS based Veeramathi software. Then to give quick services, we moved to Windows based Sanreeg software. From 7th May 2012, we changed to Infrasoft software. At present, our bank is using BSG Software from 26th March 2018.”

CARD E-LOCK FOR SECURITYGayatri Bank has adopted technology advancements from time to time to provide convenient services to customers. It specially provides protective security feature to customer. Srinivas explains: “We have introduced the card e-lock feature to control the cyber-attacks of debit card. Customer can avail the lock / unlock ATM transaction by using transaction on / off option in mobile application or toll-free method.”

When the account holder is registered for this service, his debit card will always be in disabled / inactive mode. When they want to do the card transaction for ATM withdrawal, POS and ecom transactions, customer must dial the toll-free number 07941055760 or mobile application which will enable / activate the card for ten minutes and automatically gets disabled. Srinivas further says: “With this e-lock facility customer transactions will be in their own hands. As it is easy to use / operate this feature, many of our customers are utilizing this service. We have received lot of appreciation from society for introducing this service. We are not charging our customers for this service.”

UPI TRANSACTIONSGayatri UCB is always at the forefront to provide hassle free services to the customers round the clock. The bank has launched UPI (Unified Payment Interface) services on 25th October 2020. Srinivas updates: “Our UPI transactions count in the current FY is 7.29 million. The average digital transactions count is 0.1 mn per day and we are planning to increase its count to 0.15 mn per day by end of next FY and to 0.2 mn by end of 31st March 2024.”

AEPS, BCBusiness Correspondents (BCs) are retail agents engaged by the bank for providing banking services at locations other than a bank branch/ATM. By this service, customer need not come to bank for his banking needs. Srinivas adds: “Gayatri Bank provides a new banking approach through BC / CSC (Business Correspondents / Common Service Center) point to bring the bank to the customer’s doorstep with financial inclusion mission.”

The bank started AePS (Aadhaar enabled Payment System) services on

Vanamala Srinivas will introduce bank account opening services at BC points through eKYC


Atm Withdrawl with Customers

7th April, 2021 to provide the easy and doorstep services to the senior citizens and rural people. Srinivas updates: “For this, we established nearly 288 BC points in villages and other areas around all our branches. We are planning to increase our BC point count from 288 to 400. We have provided desktop and mobile channel of BC application and have been giving training to the BC agents on regular basis to facilitate quick and prompt services to the customers. We have established BCs in all villages to provide banking services. We are going to introduce account opening services at BC points through eKYC. The testing of eKYC is in final stage now. Very shortly we are going to start this eKYC process.”

BIOMETRIC AUTHENTICATIONCustomers are availing the banking transactions including cash withdrawal, cash deposit, micro atm transactions, IMPS and fund transfer at their nearest place only. Srinivas adds: “To avoid the fraudulent transactions, we introduced biometric and iris authentication method at BC points. AePS transaction count has reached 90,080 till date.”

TECH ENABLED SERVICESFor giving convenient and user-friendly

services to its customers, Gayatri Bank is adopting newer technology enabled services. It has introduced centralized payments systems at head office with the expert team. Srinivas points out: “The various digital systems to increase customer base and achieve growth in business are provided by the bank. We established cash-full ATM services from 17th January 2014 and have reached to 55 such onsite ATMs at present.”

The bank introduced POS/ecom services in January 2017; obtained membership in NFS and launched RuPay EMV debit card and platinum card services; obtained sub-membership in CTS clearing from 2010 onwards and established CTS clearing set up at all branches for clearing of cheques faster and safer. The bank obtained sub-membership in RTGS, NEFT system and launched host to host RTGS/NEFT services; obtained mobile banking license

from RBI and has been providing services from 6th February 2016.

The bank started tollfree banking to provide the missed call services to the customers for instant banking. It got membership in NACH and have been providing NACH credit and debit facilities to customers.

Srinivas informs: “To secure operations from cyber-attacks, the bank has been monitoring all operations by adopting the antivirus and Velox softwares. We are providing Aadhaar based subsidy accounts by doorstep banking. IMPS transactions count recorded in current financial year as of October 2021 is 0.46 mn, whereas that count was 0.71 mn at the end of the last financial year. 711,180 mobile banking transactions have taken place as of October, 2021. We are trying to motivate the customer to move to the eco-friendly digital transactions.”

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Frontiers of AI – Technology & Trust

S u m m a r y : T h e responsible AI that balances ethics and societal values are getting increasingly important. For AI to be effective, it has to be trustable, asserts.

Shubhangi Sharma VashisthPrinciple Analyst at Gartner

Financial Services, Economy & Transformation

Sameer NarangChief Economist at Bank of Baroda

Summary: Banking Frontiers chats with the Chief Economist at Bank of Baroda – Sameer Narang – who explains how economists are updating themselves in light of the crisis and also shares his recommendations for economic growth.

Cooperative


Sharad UCB to upgrade to a new CBSPerformance of employees on the handling of CBS is watched carefully:

During the severe drought condition in the western region of Maharashtra during 1972, the

agriculture community suffered the worst blow. Taking this as challenge the architect of Ambegaon Taluka late Dattatrya Govindrao Walase Patil, along with his close associates come together to form a cooperative on 13 Nov 1972 to help out the farmers and down-trodden community, which were exploited at the hands of the money lenders. The cooperative’s banking license from RBI came in December 1976.

TEST, INTERVIEW, APPRAISALSharad Bank does not conduct any periodic test for existing employees. There are no significant changes done in the tests. No psychometric tests are held. Vasant Kulkarni, Deputy CEO, says: “For new candidates written test/oral test/interviews are conducted before final appointment. Marks obtained in the written test, plus marks obtained in a university exam and experience, if any, is considered for final entry. The outcomes of these tests over a period of time have been satisfactory in a limited sense. No such tests have been planned for the current FY. However, every year appraisal report is taken to continue services of the existing staff. Their reports are revised every 3-4 years.”

WATCH ON HANDLING OF CBS Sharad Bank, a member of Indian Institute of Banking & Finance (IIBF), encourages the employees to appear for its various online courses.

Kulkarni informs: “In-house tests are conducted on the personal computers provided to concerned employees. Overall performance on the handling of CBS and other software is watched. Every year training review is taken and from the feedback of Annual Confidential Report (ACR), training is given.”

CUSTOMER BASE, CRMThe customer position of Sharad Bank is marked with some additions, as the first and

second waves hit the banking sector. Total number of customers increased by 2727 to 147,995 as of FY21. Kulkarni updates: “Number of the new customers, added in the current FY, is 3129, thereby bringing the customer base to 151,124.The growth in customer base as of Q1 of the current FY is not as per our expectation. CAGR in customer base in last 5 years is around 5%. Due to presence in rural areas, customers prefer to visit branch offices of our bank. We propose to increase our customer base in the current FY by higher rate. Website, mobile banking and advertisements are the major avenues for CRM.”

Sharad Bank has no presence is social media for the presence. Kulkarni adds: “The social obligations are honoured by the bank. We have given help to covid centres through supply of food packets, we provide support in water storage management.”

DEPOSITS UP BY PIGMY AGENTSSharad Bank offers deposit products, which include fixed deposits, recurring deposits, reinvestment deposits, pigmy deposits and

special scheme for Diwali/Ganeshotav. The bank has yet not appointed Business Correspondents.

Kulkarni points out: “Since we deal only in Maharashtra state, newly added 5-6 districts are covered. Pigmy agents are the marketing forces and they are doing major business of collecting deposits. In addition, employees are given deposit/loan targets each year.”

The deposit growth of the bank was 8.93% In 19-20, which increased to 10.33% in ‘20-21. Kulkarni states: “We recorded 1% growth in the deposits as of Q1 and the growth is flat as of Q2 in the current FY.”

NEW CBS SOFTWARE SOONSharad Bank has 20 ATMs, along with 27 branches. The bank has been keeping all its ATMs full of cash to avoid inconvenience to its customers vis-a-vis customers of other banks. CBS is used for NEFT/RTGS. AI, ML is not presently in vogue and the bank is not providing internet banking. Kulkarni states: “The response on ATM usage has been good, and not a single day have the ATMs have run out of cash. Our proposal to add 4 more ATMs is awaiting RBI’s nod. Mobile banking is widely used by our customers. We propose to shift on new CBS software before December 2021. New features will be added after the CBS change over. We aim to increase our customer base significantly in the next 5 years by upgrading the present CBS for enabling net banking facilities.”

IT TEAMThe bank has outsourced its DC & DR sites. Kulkarni updates: “Our vendor is Pi Data Centers. The IT team of bank consists of 2 senior level managers and 7 supporting staff members.”

IT PLANSKulkarni reveals: “We want to get as soon as possible the RBI nod for net banking to enhance customer services through CDMs (cash deposit machines), BCs (BCs (business correspondents) etc.”

[email protected]

Vasant Kulkarni aims to increase bank’s customer base significantly in the next 5 years by upgrading the present CBS


Research Note - Digital Banking

APAC a fertile market for digital bankingA recent study on the evolution of digital banking in APAC region finds that the region is now getting ready for large scale adoption of these challenger banks:

Worldwide, there are more than 400 digital or neo banks providing various banking services more

efficiently and innovatively and challenging the traditional banks that shy away from offering such services. And the number of neobanks are just growing. The Asia-Pacific region is today one of the hotspots of not just fintechs but organizations, including financial services organizations, that make use of the prowess of the fintechs.

A study titled ‘Digital Banking in Asia-Pacific’ by BPC Banking Technologies and Fintech Consultancy Group, or Fincog, brings out the fact that an additional 663 million people in the region will start using mobile internet for the first time by 2025, which will drive the proliferation of the fintech ecosystem. It also points out that in the years between 2018-2020 consumer usage rates of fintech services have doubled, and in some instances even tripled, across APAC. This in some ways has helped in the rise of neobanks in the region. Says the study: “To date, Asia-Pacific is home to 68 neo banks. While this figure lags significantly behind the European and US markets, this is only the sign of a less mature market, which is expected to grow phenomenally once regulations are better defined. Notably, between 2012 and 2021, the market has grown at a CAGR of 37%. India is the leading country in terms of the number of neobanks with 14, while in Eastern Asia, Hong Kong has the highest number of digital banks at 12. On the other hand, China, often considered the global leader in digital banking with its 220 million neo bank customers, is only home to 4 neo banks.”

GENESIS OF NEOBANKSThe study points out to the lack of trust and reluctance on the part customers across the region to switch to an unknown provider as opposed to the incumbent institutions that they trust as the key limiting factors that inhibit people switching to digital banks. Additionally, a significant number of consumers are simply unaware of the existence of these challenger banks

or simply did not understand how they operated, it adds.

“However, 70% of Asia-Pacific consumers would be at least willing to consider a financial product offered by a non-financial provider, with a specific preference for digital banking solutions offered by already established retailers, tech groups or telecommunications firms. In rural regions particularly, enabling costs have also been a significant customer barrier,” it explains.

SUPERAPPS - GAME CHANGERThe study also talks about ‘SuperApps’, a phenomenon which is unique to the region, created as a result of the rise of JVs, which emerged due to regulations. SuperApps offer a marketplace of services of the parent company as well as offering products by third-parties, gathered under one umbrella. SuperApps allow consumers to chat with friends on social media, order food from their favourite restaurants, do some online shopping, and take out a loan all within one platform. “These have become so successful because of their ability to integrate an entire customer journey within a single platform, offering significant cost savings and creating an overall sense of trust and high levels of consumer loyalty,” the study says.

The study maintains that the APAC region is ripe with opportunity and could be headed towards leading the global fintech movement. South East Asia specifically,

which is growing at unparalleled pace and is currently less established in the digital banking space, appears to be a specifically interesting market to follow, it says.

The study finds that unlike the blanket-approach that neobanks in Europe have adopted to enter multiple markets simultaneously, consumer needs and expectations vary greatly within and between countries in APAC. Therefore, players wanting to enter this field in APAC region, should develop targeted, localized products and propositions, embrace partnership opportunities within an open tech ecosystem and utilize customer insights with a data-driven approach to successfully attract consumers.

OPPORTUNITIES GALORENevertheless, a plethora of opportunities still exists to focus on the vast unbanked and underserved population in the region, who demand low-cost digital services accessible in rural societies, says the study, adding there is an increased need for non-financial services to drive added-value to underserved customers through embedded finance. It, however, suggests that as the phenomenon of SuperApps continues to rule the market, and joint ventures and consortiums continue to be the dominant receiver of digital banking licenses, it is highly advisable that new entrants follow a similar business model.

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Top 10 Neobanks by Number of Customers 2021

Research Report - Banking


Indian Banking Sector expects improved profitability - ICRA

The second wave of the covid-19 pandemic posed challenges for banks like increase in overdue

levels and higher infection rates among employees, impacting collections and resulting in higher slippages and some increase in the restructured book. However, despite these challenges, the steady operating profitability and reducing provisioning on legacy stressed accounts continued to provide relief to the bottom-line and the capital position of banks. The GNPAs and the net NPAs remained stable at 7.7% and 2.5% respectively for banks as on June 30, 2021 compared to 7.6% and 2.5% respectively as on March 31, 2021 and 8.6% and 3.0% respectively as on March 31, 2020, i.e. at the beginning of the pandemic.

Of the total restructured loan book of `2 trillion for the banks as on June 30, 2021, the restructuring under covid 1.0 is estimated at 51% of the total restructuring of `1 trillion, while restructuring under covid 2.0 is estimated at 31% of the total restructuring or `0.6 trillion. Moreover, as per ICRA’s estimates, of the total restructuring of `1.0 trillion under Covid 1.0, 60% was accounted for by corporates, 30% by retail and the balance by the MSMEs as on June 30, 2021. The public sector banks (PSBs) were relatively more accommodative in restructuring requests of the borrowers as their restructured books stood at 2.4% of the advances vis-à-vis 1.3% of the private sector banks (PVBs).

Notwithstanding the positive headline asset quality numbers, the fresh NPA generation rate (or slippages) remained elevated during the second wave in absence of regulatory relief such as moratorium. The gross fresh slippages during Q1 FY2022 stood at `1 trillion (annualized slippage rate of 4.1%) compared to `2.5 trillion or 2.7% during FY2021. ICRA expects this to remain elevated at `0.7-0.8 trillion (2.8-3.2%) during Q2 FY2022 but moderate to `1.1-1.2 trillion (2.0-2.4%) during H2 FY2022

as the impact of second wave wanes.Commenting on the developments,

Anil Gupta, Vice President – Financial Sector Ratings at ICRA Ratings says: “Considering that 30-40% of the loan book was under moratorium during Q1 FY2020 across most banks, the loan restructuring at 2% of advances after the second wave is a positive surprise and much lower than our earlier estimates. Despite the positive headline numbers, we continue to be watchful of the asset quality, given the elevated levels of the overdue loan book and for the performance of the restructured loan book.”

With net NPAs declining to the

lowest levels in the last 6 years, the legacy asset provisioning for the banks has been declining in relation to their core operating profits. As per ICRA’s estimates the GNPAs and NNPAs are expected to further decline to 6.9-7% and 2.2.-2.3% by March 2022 which will continue to be a relief for the bottom-line of lenders. Despite expectations of moderation in gains on bond portfolios because of expectations of rising bond yields in FY2022, the Return on Equity for banks is likely to remain steady at 4.4-7.6% for PSBs (5.1% in FY2021) and 9.5-9.9% for PVBs (10.5% in FY2021).

With increased confidence on the

6.0

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10.012.014.016.0

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Gross NPAs – Public & Private Banks

3.5

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position of banks, RBI also phased in the last tranche of the Capital Conservation Buffer (CCB) from October 1, 2021, which otherwise was deferred four times in the last three years. This will entail higher regulatory capital requirements, i.e. Core Equity Capital of 8% compared to 7.375% earlier, but the banks are well placed in our view for these enhanced capital requirements. The PSBs raised `103 billion of equity capital (0.18% of risk weighted assets – RWAs) from the markets in H1 FY2022, which followed a capital raise of `120 billion (0.21% of RWA) in FY2021. Large private banks also remain well-capitalized though few mid-sized PVBs could need to raise capital.

Apart from the asset quality, the rollover of additional tier-I (AT-I bonds) of public banks remains to be monitored,

given the sizeable quantum (`278 billion) of bonds that have the scheduled call option in FY2022 and FY2023. Apart from State Bank of India, none of other PSBs have raised AT-I bonds this financial year. As per ICRA’s estimates, the PSBs may not need the capital budgeted by the Government of India for FY2022 even with enhanced capital requirements. However, it provisions for any unforeseen events and shall provide confidence to banks as well as investors and credit growth.

“With the improved capital and profitability position of public banks, which accounts for a ~62% share in bank loans, and abundant liquidity in the banking system, supply of credit does not appear to be a constraint. Nevertheless, revival of credit demand and the willingness of banks to push growth will

be the key drivers of the overall credit growth in the economy. We continue to maintain our credit growth estimate of 7.3-8.3% for banks for FY2022 compared to 5.5% for FY2021,” Gupta concludes.

51%31%

18%

MSME

Mix of Restructuring Covid 1, Covid 2 & MSME restructuring

Covid 1 Covid 2

SIDBI-Google to help MSMEs with `1.1 bn corpus

Currency in circulation rises to `29.8 tn amidst festive demand

Small Industries Development Bank of India (SIDBI) has entered into a

partnership with Google India Pvt Ltd (GIPL) for a pilot social impact lending program with the financial assistance of up to Rs 10 million at subsidized interest rates targeted at micro-enterprises.

The partnership brings a corpus of $15 million (approximately Rs 1.10 billion) to micro-enterprises as a crisis response related to Covid-19 to reinvigorate the MSME sector in India. The partnership envisages a loan program targeted at micro-

enterprises (having turnover up to Rs 50 million), with loan sizes ranging from Rs 2.5 million to Rs 10 million, being implemented by SIDBI. The major focus under the program shall be on enterprises run by women entrepreneurs.

Sivasubramanian Ramann, IA&AS, Chairman and Managing Director of SIDBI said, “We have launched various programs for an emergency response to the sudden advent of Covid such as SAFE, SAFE plus scheme, AROG, and

SHWAS. This also marks SIDBI’s launch of a paperless journey to its customers from onboarding to the disbursal stage.”

Sanjay Gupta, Vice President and Country Manager, Google India, said, “We have a commitment to enable India’s small businesses

in leveraging the opportunity provided by digital so that they scale, innovate and reach new customers through a range of tools, services, and products that are specially designed for them.”

Currency in circulation (CIC) increased by Rs 439 billion to Rs 29.88 trillion

in the week ending November 5, 2021, owing to festive demand. According to Kotak Institutional Equities research, the current CIC outstanding is 15.1% of FY2021 nominal GDP.

The system liquidity surplus improved last week amidst heavy redemptions and

reduction in Cash Reserve Ratio (CRR) balances. On a W/W (week on week) basis, the average liquidity surplus last week increased to Rs 8,111 billion as against an average surplus of Rs 7,376 billion the previous week.

Tracking the improvement in liquidity surplus, the average overnight rates moved lower by 10bps W/W to 3.27%. Further,

RBI’s rapid liquidity management through variable rate reverse repo (VRRR) has led to a surge in the weighted average reverse repo rate which has increased by 42bps from mid-September to 3.79% currently. The system liquidity surplus is expected to moderate this week as GST collections and auction outflows are expected to outweigh the CIC payback and government spending.

N E W S Banking

Research Notes


Asia-Pac banks increasingly adopting cloudIDC, with Infosys Finacle and IBM, has brought out a snapshot of the fast-changing landscape in cloud adoption in the Asia-Pacific region:

The Asia-Pacific region’s cloud spending is projected to post annualized double-digit growth through to 2024,

according to a snapshot prepared by IDC in collaboration with Infosys Finacle and IBM. The study, titled ‘Definitive Guide for Banks to Build a Successful Business on Cloud’, outlines how the landscape is changing fast.

Discussing cloud for business agility, it says disruptive competition by digital natives, increasing disintermediation and changing customer expectations are fragmenting traditional bank value chains and driving banks to deploy cloud to stay ahead of hyper-competition. It projects the region’s digital transformation cloud spending between 2020 and 2024 to sustain a CAGR of 35% (compared to worldwide growth of 30%) to reach US$15 billion in 2024.

It says cloud is increasingly adopted as the default choice for both new applications and to improve legacy systems as banks reinvent their operating models. And 40% - 50% of the region’s financial institutions are looking to change their core banking systems in the next 3 years, with major considerations for cloud-native core banking solutions.

The study reveals that more than 70% of Asia-Pacific banks have deployed their digital commerce applications over the cloud with a focus on expanding their footprints in the digital economy.

USING ON THEIR OWN TERMSEmphasizing that Asia-Pacific banks are taking on cloud on their terms, the study points out that >70% of large banks in the region have adopted enterprise private cloud (on-premises), >50% have moved their corporate deposit and lending systems largely to private cloud, and >50% have adopted a hybrid cloud environment. Their focus is on transforming legacy core banking systems through remediation and re-platforming to be platform-compliant and cloud-ready; and layering existing infrastructure to gain the ability to interconnect heterogenous systems and exchange data.

In the case of small and medium-sized banks, >58% run their consumer and small business loan origination primarily on public cloud and >60% of medium-sized banks are leveraging cloud to avail services that are designed for DevOps. The focus for medium-sized banks is on replacing select applications with a software-as-a-service (SaaS) equivalent and gradually relocating the application to the cloud environment to cope with exponential growth in digital transactions and improving regulatory compliance.

As regards small banks specifically, 80% prefer functional cloud vendors (marketing, sales or other support functions) to create vertically-oriented ‘sub clouds’ to better serve their specific requirements. It has been found that retail banks in this category have been quick to explore cloud and the priority is to reduce the cost of core banking, consolidate services and to rationalize distribution channels and access layers

DIGITAL NATIVE INSTITUTIONSStating that the region will see nearly 100 new digital-native financial institutions by 2025, the study says their focus areas will be effectively residing in cloud and leveraging a platform to expand on open banking offerings while building a sound ecosystem through collaborative partnerships.

The study discusses 3 banks which have banked on cloud to reap tangible and intangible rewards. Among them is the

Indian bank, Shivalik Bank. It points out that technology modernization enabled the bank to innovate quickly and roll out new products and services on demand to meet the needs of the fast-changing marketplace.

For example, Infosys Finacle’s integrated digital banking solution helped the bank to achieve a transformational leap in its technology base, delivering high-quality customer service and providing highly personalized customer offerings. Leveraging SaaS to power its next phase of growth, it gained the agility it needed to cost effectively manage scale and power its growth with an on-demand portfolio of products and services. The bank also shifted its banking platform to an operational expense model, ensuring that it only pays for what it uses without significant upfront investments.

The other 2 banks cited in the report are Westpac and Australian Military Bank of Australia.

The study highlights that the use of cloud in banking boils down to the principle of choice for the best-fit environment for specific workloads and applications, and this will be based ultimately on what the business wants to achieve. Hybrid cloud strategies are driving interoperability, creating an open infrastructure that lets applications and data move freely across cloud platforms, it adds..

[email protected]

IDC Financial Insights maps a bank’s cloud maturity using IDC’s five-stage Cloud MaturityScape Framework, from ad hoc to optimized.

At this earliest stage, banks are focused primarily on pilot

projects/validation activities driven by the

needs of individual decision makers

within departments.

Having made some progress, banks

continue to be driven by the business

needs of individual workgroups and departments, but with no effort to share resources.

Banks at this stage optimize efforts

made to leverage and reuse best practices and

resources across multiple groups.

At this advanced stage, banks are driven by a cloud-first approach in which the use of cloud is supported

by proactive business and IT leadership

driving cloud decisions within the bank.

At this most mature stage, the bank

has broadly implemented a

cloud-native strategy that is proactively

managed and clearly driving results across the business verticals.

are in the advanced stages of cloud maturity

IDC’s survey of banks in the Asia/Pacific region in 2020

Where are you in your cloud journey?

Ad Hoc

1 2 3 4 5Opportunistic Repeatable Managed Optimized

Source: IDC Industry Cloudpath 2021

17% 17%

29%

24%

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Research Report - Collections

NBFC collections steady for securitized pools across asset classes remain - ICRA

The average collection efficiency in ICRA-rated securitized retail pools originated by Non-Banking

Finance Companies (NBFC)s and Housing Finance Companies (HFC)s improved significantly during Q2 FY2022 on the back of continued decline in fresh Covid-19 infections during June to October 2021 period, a high share of vaccinated population and uninterrupted operational activities of these entities. Collection efficiency (including overdue collection) for the most affected asset classes, viz microfinance and SME loans, reached close to 100% for September 2021 from a low of 80% seen in May 2021. Collections in the housing loan segment continued to remain healthy during Q2 FY2022, post swiftly recovering to pre-second wave level in June 2021.

Further, the collections in commercial vehicle (CV) loans have also improved to more than 100% by September 2021 driven by higher inter/intra-state movements upon revival of businesses/mining/factory production activities driving movement of raw materials/final products backed by increased consumer demand owing to various festivals in Q2 FY2022.

Says Abhishek Dafria, Vice President and Head - Structured Finance Ratings at ICRA: “With the operations of lenders achieving close to normalcy levels in Q2 FY2022, the monthly collection efficiencies recovered to pre-second wave levels across the asset classes as observed in ICRA-rated securitized pools. While the possibility of another wave of fresh Covid infections remains, the likelihood is reducing as the proportion of vaccinated population has been on a steady rise. We thus expect collections to remain healthy for the near term. The 90+ delinquencies have seen a decline as of September 2021 compared to the peak seen in May 2021, but remain much higher than the pre-Covid levels for most asset classes. Majority of the lenders have reported

lower bounce rates in their portfolio led by the improvement in collections on the back of uninterrupted operational activit ies. With stable business environment expected to continue, we expect stable credit performance of ICRA-rated securitization pools.”

ICRA has also observed that with the resumption of normalcy in business and operational activities, the collections performance of retail pools securitized post the first wave (i.e.

September 2020), especially for the more affected unsecured lending sector (i.e. unsecured SME and microfinance loans) remained robust and better than the pools originated prior to the same. This is on account of tightening of pool selection criteria by the investors and strengthening of better-quality loans in the prevailing credit appraisal processes and parameters by the lenders to ensure addition of better-quality loans in the portfolio.

Source: ICRA Research, CEIC*Jul-21E represents es�mated collec�on numbers Monthly collec�on efficiency = (current collec�ons + overdue collec�ons)/current billings

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HL & LAP - LHS Vehicle Loans - LHS Microfinance loans - LHSSME Loans - LHS Fresh covid cases - RHS

ICRA-rated pools’ monthly collection eciency and trend in monthly fresh Covid cases

0.6% 0.7% 0.6%

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HL & LAP SME Microfinance Vehicle loans

Feb-20 Dec-20 Mar-21 May-21 Jun-21 Sep-21

Delinquencies (90+dpd) trend in ICRA-rated pools

Ranking


East Europe & Central Asia rise in GFCI ratings

The 13th edition of the Global Financial Centres Index (GFCI 30) provides evaluations of future

competitiveness and rankings for 116 financial centres around the world. The GFCI is compiled using 146 instrumental factors. These quantitative measures are provided by third parties including the World Bank, the Economist Intelligence Unit, the OECD and the United Nations.

China Development Institute (CDI) in Shenzhen and Z/Yen Partners in London collaborate in producing the GFCI, which is updated and published every March and September, and receives considerable attention from the global financial community. The GFCI serves as a valuable reference for policy and investment decision-makers.

GFCI 30 rates 116 f inancial centres across the world combining assessments from financial professionals with quantitative data which form instrumental factors. GFCI 30 has used 77,391 financial centre assessments, collected from 12,862 financial services professionals, who responded to the GFCI online questionnaire.

NEW YORK’S HAT TRICKNew York held on to the top position in the index and has now been in 1st place for 3 years. London remained in 2nd place, while Hong Kong and Singapore in 3rd and 4th position both fell 25 points in the ratings. San Francisco, Los Angeles, and Paris entered the top 10 in GFCI 30, with falls in the ratings and rankings for other leading Asian centres. Nine of the top 10 centres in the index fell in the ratings.

The relatively strong performance of New York and London suggest that the financial services sectors in these cities managed to sustain their performance despite radical changes in working practices during the last 18 months. North American centres performed well in GFCI 30. This is likely to reflect renewed optimism about the US and Canadian economies as they move

forward from the pandemic.

EXCEPTION: MUMBAI, GIFT CITY The majority of the Asia/Pacific centres in the index fell in the rankings in GFCI 30. The exceptions were Hong Kong, Singapore, Seoul, Busan, Wellington, Qingdao, Mumbai, New Delhi, Bangkok, GIFT City-Gujarat, and Jakarta.

Each of the Asia/Pacific centres in the top 10 in the GFCI dropped 25 points or more in the ratings. Assessments from people based in Asia/Pacific suggest that they judge Chinese centres in particular less favourably than before. This might suggest that the economic gains in the region arising from covid may be levelling off.

STRONG RECOVERY FORECASTMoscow, Warsaw and Istanbul lead in the Eastern Europe & Central Asia region, which also performed strongly. 12 of the 16 centres in the region rose in the GFCI rankings and 9 centres improved their rating. Many economies in the region are forecast to recover strongly following the shock of 2020.

Dubai and Abu Dhabi take 1st and

2nd places in the Middle East & Africa region, both improving in the ranking slightly. Casablanca continues to be the leading African centre, while Cape Town, Johannesburg, and Nairobi increased their ratings by more than 20 points.

Mexico City, Rio de Janeiro, and Sao Paulo were the only centres in the Latin America & Caribbean region to improve their ranking and ratings. Other centres, including the Caribbean Islands, fell sharply in the ratings, reflecting the economic shock experienced in the region as a result of the covid pandemic.

AVERAGE RATING FELLOverall, the average rating fell 12.9 points (2.05%). While a small change, this is the third consecutive fall in the average rating. The fact that overall ratings continue to fall against the levels that were seen in 2019 reflects the continuing uncertainty around international trade, the impact of the covid pandemic, and geopolitical and local unrest. Kigali and Lagos join the index for the first time, recognizing the growth of financial services in Africa.

FINTECH: WEST EUROPE GAINS109 centres have been rated on their fintech offering. Fintech ratings were generally lower than in previous editions of the index. New York and Shanghai retained 1st and 2nd positions in the GFCI 30 FinTech ranking, with London rising two places to 3rd place. In the top 40 positions, Western European centres performed well, with most gaining rank position.

Two patterns are seen in the results for GFCI 30 – confidence in the recovery of the North American and Western European economies following the shock of 2020; and a levelling off following the rapid rise of Asia/Pacific centres and their economic stability in the covid pandemic. Competition remains tight. Outside the top 2 centres, only 5 points on 1000-point scale separate the centres ranked 3rd to 8th.

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ADB Report

ADB lends for vaccines, health care in India

The Asian Development Bank (ADB) has been proactively increasing its engagement with India. A number of

approval and agreement has come India’s way in recent months.

ADB has approved a $1.5 billion loan on 25 November 2021 to help the Government of India purchase safe and effective vaccines against the coronavirus disease. The project is financed through ADB’s $9 billion Asia Pacific Vaccine Access Facility. The Asian Infrastructure Investment Bank is expected to co-finance an additional $500 million for the project. In another development, the GoI has requested a regular loan of $500 million from ADB’s ordinary capital resources to help finance the Strengthening Multimodal and Integrated Logistics Ecosystem (SMILE) program, a policy-based loan (PBL) to support the government undertake wide-ranging reforms in the logistics sector in India.

The $1.5 billion loan will fund at least 667 million covid vaccine doses for an estimated 317 million people. It will support India’s National Deployment and Vaccination Plan, which aims to fully vaccinate 944.7 million people aged 18 years old and above, accounting for 68.9% of the population.

ADB President Masatsugu Asakawa said: “Vaccines are critical in overcoming the intertwined health, social, and economic impacts of the pandemic, including rejuvenating economic activities, sustaining health services, restoration of livelihoods, and reopening of educational institutions, with renewed focus on social and human development priorities.”

An ongoing ADB technical assistance grant of $4 million, which includes $2 million support from ADB’s Japan Fund for Poverty Reduction, is helping strengthen India’s vaccine delivery system. This support is being provided in close collaboration with the World Health Organization (WHO) and the United Nations Children’s Fund (UNICEF).

The GoI and the ADB has signed a $300 million loan to strengthen and improve access to comprehensive primary health care in urban areas of 13 states that will benefit over 256 million urban dwellers

including 51 million from slum areas. The programme is supported by a $2 million technical assistance grant from ADB’s Japan Fund for Poverty Reduction.

Rajat Kumar Mishra, Additional Secretary, Department of Economic Affairs, Ministry of Finance, who signed the agreement, said that the programme supports the GoI’s key health initiatives - Ayushman Bharat Health and Wellness Centres (AB-HWC) and Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (PM-ABHIM) by expanding availability and access to quality primary health care services particularly for vulnerable populations in urban areas.

Takeo Konishi, Country Director of ADB’s India Resident Mission, said: “The program complements the government’s efforts to bridge the health care gaps by strengthening institutional capacity, operation, and management of urban health and wellness centres at the central, state, and municipal levels.”

Delivery and health information systems for primary health care will be upgraded through digital tools, quality assurance mechanisms, and engagement and partnership with the private sector.

$100 million ADB loan will boost agribiz network in Maharashtra

ADB is preparing an innovative Maharashtra Agribusiness Network (MAGNET) project. MAGNET will increase the incomes of small and marginal farmers in Maharashtra in line with the state government’s Vision 2030 by providing holistic agribusiness and value chain support in horticulture. ADB and the Government of India has signed a $100 million loan to promote agribusiness network to boost farm incomes and reduce food losses in the state of Maharashtra.

MAGNET will enhance (i) the capacities of agribusiness institutions and farmer producer organizations, (ii) access to finance of farmer producer organizations and value chain operators, and (iii) horticulture value chain infrastructure. The infrastructure will use designs that are responsive to gender and people with disabilities, and include climate

adaptation and mitigation financing.Despite the state producing 12% of

India’s total fruit production and 7% of the country’s total vegetable production, farmers are unable to benefit fully from horticulture as they lack access to adequate post-harvest facilities, finance and equipment.

To help farmers including women overcome these challenges, the ADB and Maharashtra’s Department of Cooperation Marketing and Textiles is initiating the Maharashtra Agribusiness Network project to support the development of the horticulture sector.

According to Anoop Kumar, Principal Secretary Marketing, GoM, MAGNET is a project which is totally aligned with GoM’s long-term vision.. We want to extend agricultural credit to all the farmers, especially horticulture farmers, and create quality infrastructure for storage and processing.

According to Masahiro Nishimura, Senior Rural Development Specialist, South Asia, Department, ADB, MAGNET project directly targets 200 farmer producer organizations and 100 value chain operators to enhance their capacities and provide access to finance. The project will create 10,000 jobs benefitting women and vulnerable groups and increase farmer producer organizations’ annual profit by 10%. ADB will demonstrate value addition in exemplary rural and agricultural transformation in Maharashtra.

“The project supports agribusiness development in Maharashtra with holistic support to on-farm improvement in productivity, upgradation of post-harvest facilities,” said Rajat Kumar Mishra.

[email protected]

Event Report


World seeks India as trusted tech partner: MoS, MeITYStartups have unprecedented opportunity to succeed and grow in Indian startup eco-system:

Rajeev Chandrasekhar, Minister of State for Electronics & Information Technology, celebrated Diwali with

Bangalore based startups. In a program organized jointly by NASSCOM and STPI (Software Technology Parks of India) in Bangalore, the minister interacted with startups knowing about their journey, the challenges they face and their suggestions on how to further strengthen the government’s support to the startup program.

He had an engaging and interactive conversation with DeepTech, TechWe and STPI IoT OpenLab startups based out of Karnataka along with industry leaders. The minister also viewed the game changing solutions of the startups and the people they have impacted in their digital inclusion journey. Deliberations were also held on ‘Strategies to develop the Deep Tech ecosystem in India by 2026’.

Chandrasekhar mentioned that the way the Indian economy has bounced back post the pandemic, a lot of that has to do with the strong foundations laid by the Digital India program, launched by the PM launched the ‘Digital India’ program in 2015.

Chandrasekhar remarked: “There has never been a better time for the startups than now. The startups have a universe of opportunity and the world is now looking for new trusted suppliers like India.” He added that it is the priority of the government to digitalize all its services and this shall further result in creating additional demand.

Chandrasekhar also stressed upon the need to spread the entrepreneurship to smaller cities and to replace the outsourcing model with the co-development/ co-working model to support the next stage of entrepreneurship. He assured the startups that the government is willing to play an active role in assisting them with all necessary policy support and by facilitating market linkage.

The interactive session saw active participation from the entrepreneurs who shared their experiences, challenges and suggestions for making the startup

ecosystem more vibrant.

Harnessing power of AI for good governance

Embracing the possibilities of Artificial Intelligence (AI) in governance can help in devising better policies and predict challenges earlier. Focused on this thought, the National eGovernance Division (NeGD) under the Ministry of Electronics and IT (MeitY) recently organised an ‘AI Pe Charcha’ (AI Dialogue), wherein the panelists discussed the importance of data-driven and AI-enabled governance along with the global best practices.

The session had speakers from diverse backgrounds leading to an engaging session for government officials, AI enthusiasts, AI practitioners, youth, and those who want to understand the implementation aspects of AI. The eminent panelists spoke about the importance of using the right data and how different governments around the world have employed AI to standalone departments and processes for devising prudent policies.

Abhishek Singh, President and CEO, NeGD noted that there are ample amount of case studies from around the world on the use of AI in the fields of healthcare, agriculture, skilling, manufacturing, etc. “What is needed is that such solutions become more ubiquitous and benefit people

more and more,” he said.The keynote speaker at the session, Dr

Martin Klein, Global General Manager, Public Services, SAP, Walldorf, Germany, shared his views on AI for public sector, defence & security, postal services, future cities. He noted that with a lot of data present across the globe, it becomes imperative to use the right data for the betterment of governance and processes. “AI-driven governance empowers us with the knowledge of predicting challenges and endows us with the ability to successfully mitigate such challenges. This helps us take actions proactively, draft citizen-friendly policies and also enhance our overall working processes,” he said.

Rahul Lodhe, Senior Director, Engineering, Head of SAP Artificial Intelligence Foundation, India gave a presentation & demo of AI driven solutions like covid city-scale simulator and logistic modelling, complex document extraction to government resource planning systems and intelligent accounting automation –invoice, receipt, accounts reconciliation using machine learning. He shared an insightful case study about a project of SAP, done in collaboration with Indian Institute of Science, Bengaluru on how an AI application helped in predicting the infection spread and impact of covid in India during the first wave. “Government of India is ready to harness the advantage of AI for building a better nation, especially in the area of social empowerment,” he said. Every speaker’s session ended with live interaction between the attendees and the experts.

The AI Pe Charcha series has been initiated as a part of Responsible AI for Social Empowerment (RAISE), India’s first global AI summit, which was organised by MeitY in 2020. Such initiatives by the government of India have commenced a much-needed discourse on AI and would lead to certain positive, tangible meaningful changes in the overall economic and the social sphere. The knowledge partner for this session of AI Pe Charcha was SAP.

[email protected]

Rajeev Chandrasekhar


Chanaka Wanigasooriya is CIO at People’s Bank Sri Lanka

Buvanesh Tharashankar is CFO at Jana SFBJana Small Finance Bank has appointed Buvanesh Tharashankar as President and Chief Financial Officer of the bank. The bank said the appointment is to strengthen its top management team. It also said Buvanesh Tharashankar will be instrumental in providing strategic and long-term financial direction to the bank’s business and will work closely with others in the organization’s leadership team to streamline business processes, working capital management and business strategy, optimize revenue and minimize costs. He has been with Citibank for more than 25 years and has held several positions in the finance function of the bank in multiple geographies. He is a CA and B.Com.

Manish Dubey is EVP at Yes PrivateManish Dubey joins Yes Private, a unit of Yes Bank as Executive Vice President. He was earlier with Axis Bank and worked as Senior Partner at Burgundy Private. He has also been with Centrum as an Executive Partner, and with Religare Securities. Manish is an MBA from SCMS, Kochi.

Gita Gopinath to be No 2 at IMFIndia-born Gita Gopinath is set to take over as the First Deputy Managing Director of International Monetary Fund. She is at present IMF’s Chief Economist. She will succeed Geoffrey Okamoto, who is leaving IMF after his term. First Deputy Managing Director is the No 2 position in the hierarchy of IMF. Gita is the first woman to serve as the IMF’s chief economist. She had earlier said she planned to leave IMF to rejoin Harvard University in January 2022 to retain her tenured facility post after 3 years of public service. IMF said in a statement the First Deputy Managing Director will take the lead on surveillance and related policies, oversee research and flagship publications and help foster the highest-quality standards for fund publications. Gita led the IMF’s research department through

the pandemic era and a 2020 recession. She has been teaching at Harvard’s economics department since 2005. She holds a doctorate in economics from Princeton University, where Ben Bernanke was among her advisers before he became Federal Reserve chairman.

Vinod Easwaran is MD & CEO at Jio Payments BankVinod Easwaran is the new Managing Director & CEO of Jio Payments Bank. He was earlier holding the position of Senior Vice President and Head - NBFC Business at Jio Financial Services. Vinod has also worked for Seynse Technologies as Venture Head & Chief Operating Officer and with Management Consulting as a Management Consultant. He has completed a Global Program for Management Development from Stephen M. Ross School of Business of University of Michigan and PGDM from T.A. Pai Management Institute.

Chanaka Wanigasooriya has been made Digital Transformation Consultant and CIO at People’s Bank Sri Lanka. People’s Bank is the first and only bank in Sri Lanka to be accredited with the ISO/IEC 27001:2013 certification. Chanaka has also worked with Assetline Contract, MyPRO Consultancy and Services and Cargills Ceylon as CIO. He is an MBA from Australian Institute of Business.

People Track in Bank

Vidya Lakshmi to head HR at Wells Fargo (India & Philippines)US bank Wells Fargo has named Vidya Lakshmi as Head of Human Resources for India and the Philippines. She is reporting to Arindam Banerrji, Managing Director and Executive Vice President for India. She will also be part of the bank’s Operating Committee for India and the Philippines. The bank said she will lead all the HR services of the bank across the 2 regions and oversee the implementation of country-specific labour practices and effective risk controls. She is responsible for defining and driving the people strategy and priorities for the approximately 37,000 employees in India and the Philippines region in partnership with the local and global leadership. Vidya has been with Goldman Sachs for over 15 years holding positions

including Head of Human Capital Management, Head of HR Operations and Chief of Staff to the CEO at its India operations in Bengaluru. She began her career in Goldman Sachs in the Investment Banking Division where she worked with the Industrials Group in New York and Bengaluru covering a diverse set of clients. She has a bachelor’s degree in Economics from the University of Madras and is a Chartered Accountant.

Nirmal Patel promoted DGM at Bank of BarodaNirmal Patel has been promoted as Deputy General Manager at Bank of Baroda. He has been with Dena Bank, where he was Assistant General Manager, when the bank merged with Bank of Baroda. He has vast experience in branch banking and credit operations in Dena Bank and had started the bank’s operations in London. He has also worked in Oriental Bank of Commerce before joining Dena Bank. He is an MBA from B.K. School of Business Management.


People Track

Pinak Chakraborty is CIO at Airtel Payments BankAirtel Payments Bank has appointed Pinak Chakraborty as its Chief Information Officer. A seasoned technology professional, Pinak will lead the payments bank’s overall technology strategy and be responsible for digital innovation and transformation of products and services. Prior to joining Airtel Payments Bank, he was heading product engineering for PayMaya, a Philippine fintech. He is an engineering graduate in Computer Science and Engineering from NIT Silchar and has completed a post-graduate certification from IIIT Hyderabad. He has 14 patents granted by the US Patent Office in the areas of application of machine learning and natural language processing.

Sandeep Sood is Sr VP - Tech Risk at HDFC BankSandeep Sood has been appointed Senior Vice President -Technology Risk at HDFC Bank. Sandeep has been with L&T Financial Services as Head - IT Infrastructure & Services. He has also worked with Reliance Jio Infocomm as Assistant Vice President - Operations and with National Payments Corporation of India as Assistant Vice President - IT Infra and Data Center. He has completed a course from the Indian Institute of Management, Ahmedabad in Managing IT Projects and M.S. (Software Systems).

Inderjit Camotra to be CEO of Unity Small Finance Bank

Vizil Colaco is Head IT Infra & Operations at Ahli UnitedVizil Colaco is the new Head of IT Infrastructure & Operations at Ahli United Bank, Oman. He has earlier held the position of Head of IT Infrastructure and Operations at Ahli Bank, Bahrain. Vizil has also worked in Qatar Islamic Bank as Head - IT Services and Ahli United Bank as Head IT Operations and Business Support. He holds a Bachelor of Engineering degree in Computer Science.

Inderjit Camotra is the interim full time CEO of Unity Small Finance Bank. Inderjit has been Executive Director with Centrum Financial Services. Prior to that, he was with Standard Chartered Bank as Executive Director and ANZ as Director. He has a B. Tech from the Indian Institute of Technology, Delhi, MBA from Clarkson University, US and LL. B from Mumbai University.


New MD & CEO for Cosmos BankCosmos Cooperative Bank has announced it is appointing Apekshita Thipsay as the Managing Director of the bank. She will have a tenure of 3 years. She is the first woman MD of the bank. Apekshita holds M. Com and LLB degrees and is a CAIIB. She has 32 years of experience with the bank and has worked across various departments. In the last few years, she has successfully led the bank’s credit portfolio as Chief General Manager. She was working as Joint Managing Director for the past few months.

Ashwin Khorana is CIO at Ujjivan Small Finance BankAshwin Khorana has been appointed Chief Information Officer at Ujjivan Small Finance Bank. Prior to this assignment, he was an independent IT advisor and consultant. Earlier, he has worked with Jana Small Finance Bank as Chief Information Officer and ING Vysya Bank as Chief Technology Officer. Ashwin has undertaken an Advanced Management Program in Business Administration and Management from the Indian Institute of Management, Bangalore.

Tuheena Gilotra promoted to Vice President at BarclaysTuheena Gilotra is the new Vice President - Internal Audit at Barclays Bank. She was Assistant Vice President at Barclays before the elevation to the new position. She has also worked as a Business Auditor at Societe Generale, Senior Auditor at RBS and Chief Manager – Audit at Kotak Mahindra Bank. She is a CA and CFA (US).

Jitin Hiranandani joins Ahli BankJitin Hiranandani is the new Delivery Head - Institutional Banking Group Technology Unit at Ahli Bank. He comes from DBS Bank, where he was Head, Institutional Banking Group, Technology unit at DBS India. He has handled technologies like Robotic Process Automation, and Early Warning System and Workflow System. He has also worked in the PMO division of Mashreq Bank. Jitin has a Masters in Business/Managerial Economics from the University of Mumbai.


New position for Tharaka Ranwala at Sampath Bank Tharaka Ranwala has been appointed Group Senior Deputy General Manager - Group Marketing, Deposit Mobilization and Digitalization - at Sampath Bank in Sri Lanka. He has 15 years of service in the bank and has held positions such as Senior Deputy General Manager - Group Marketing, Deposit mobilization and Digitalization, Senior Deputy General Manager - Operations / Group Chief Marketing Officer and Senior Deputy General Manager - Consumer Banking. He has also been with DFCC Bank as a Business Development Manager.

Simmi Sareen joins Unitus Capital as DirectorSimmi Sareen has assumed the position of Director at Unitus Capital. A chartered accountant and an MBA from London Business School with 23+ years of financial services experience, she was co-founder of Climake, a climate venture studio to support early-stage innovations and startups. She has also founded Green Funder, an asset finance and working capital firm funding social enterprises and startups. She has also been founder and CEO of Loans4SME, a fintech platform for MSMEs to obtain loans. She is a Sloan Masters from London Business School, specialising in Leadership & Strategy and a Chartered Accountant.

Akhil Chaturvedi is Director and CBO at Motilal Oswal AMCAkhil Chaturvedi has been promoted as Director & Chief Business Officer at Motilal Oswal AMC. He has responsibilities for sales, products and business development. He was earlier Head of Sales and Business Development in the company. He has also worked as Associate Director and Head Sales at Daiwa Asset Management (India) and Regional Manager at Birla Mutual Fund. He is a Certified Financial Planner and an MBA from University of Leeds.

Vibhash Sinha joins Poonawalla FincorpVibhash Sinha has joined Poonawalla Fincorp as General Manager. He was with Kotak Mahindra Bank as Regional Sales Manager for about 3 years before he joined Poonawalla Fincorp. He has also worked with Indiabulls Housing Finance. Vibhash holds an MBA in Marketing from Asia-Pacific Institute of Management.

Khizar Mohammed Momin joins ISFCLKhizar Mohammed Momin has become the Executive Vice President and Chief Technology Officer at Indian School Finance Company. He was functioning as Vice President and Head IT at Toyota Financial Services India. Khizar has also worked as Head of IT at Cox & Kings Financial Service as well as Head Technology Delivery, PMO and Innovations at Bajaj Finserv. He holds an MBA from Symbiosis Institute of Management Studies and BE from Dr Babasaheb Ambedkar Marathwada University.

Vivek Tiwari is Vice Chairman, MFINVivek Tiwari has assumed office as Vice Chairman of Microfinance Institutions Network (MFIN). He was a member of the board of the institution. Vivek has also worked as Managing Director at Sathya MicroCapital and Chief Operating Officer at Satin Creditcare Networks. He holds a PGDRM from the Institute of Engineering and Rural Technology, Allahabad

People Track in NBFC


Raghunath is Additional Director at Ujjivan SFBUjjivan Small Finance Bank said it has appointed P.N. Raghunath as an additional director on the board of the bank. Raghunath is a General Manager at RBI, Bengaluru. He will hold the position at Ujjivan Small Finance Bank for a period of 2 years.

Piyush Tiwari made Senior VP at HDFC BankPiyush Tiwari has been promoted as Senior Vice President - Vertical Head Sales - Payment Business (Merchant Acquiring) at HDFC Bank. He has held the position of Vertical Head - Merchant Acquiring at the bank earlier. He has also been Regional Head - Payment Business, and Senior Manager Merchant Acquiring and Credit Card at the bank. He has also worked with ICICI Bank.


People Track

2 key appointments at HomeFirst HomeFirst has named Dharmvir Singh as its new Chief Technology Officer and Ashishkumar Darji as Chief Risk Officer. Dharmvir Singh holds an experience of over 15 years as a technology leader in various organizations such as TCS, Birlasoft, IBM and Wipro Technologies executing several large-scale green-field platform implementations in BFSI space covering several million customers. His last assignment was with Hero Fincorp where he led the digital transformation for retail business which is the largest portfolio of the group. He holds a B.Tech in Computer Science & Engineering from Uttar Pradesh Technical University, Lucknow and an MBA from IIM-Kozhikode. Ashish kumar Darji is a risk management professional and was Technical Director at KPMG where he worked for 7 years in the risk management area. He has also

worked with State Bank of India, Kotak Securities and Clearing Corporation of India in risk management. He is a CA, and LLB.


Shalabh Saxena to be MD & CEO of Spandana SphoortyMicrofinance company Spandana Sphoorty has appointed Shalabh Saxena as its new Managing Director & CEO. He replaces Padmaja Reddy, who was founder CEO of the company, and resigned abruptly over differences with the majority stakeholders. Saxena has been the MD & CEO of Bharat Financial Inclusion, a unit of IndusInd Bank. Spandana Sphoorty has also appointed Ashish Damani, also from Bharat Financial Inclusion, as President & Chief Financial Officer. Abanti Mitra, who has been an independent director on the board of the company since 2011, has been appointed as the non-executive Chairperson of the board. Outgoing Chairman Deepak Vaidya will continue to serve on the board as an independent director.

Rajesh Ranjan Singh is new Head-Risk at JupiterRajesh Ranjan Singh is the new Head of Risk at Jupiter. Rajesh has earlier been Director -Risk Management at American Express. He holds an MBA from Indian Institute of Management, Kozhikode, and B. Tech in Computer Science and Engineering from BIT Mesra.

Manjith Mohan joins Cholamandalam Manjith Mohan has joined Cholamandalam Investments and Finance Co as part of the Leadership Team - Learning & Organizational Development. He will be managing and driving the learning culture for various entities in the group - Cholamandalam Investments & Finance, Cholamandalam Securities, Cholamandalam Home Loans & Cholamandalam Business Management Services. Manjith had earlier worked for IIFL (India Infoline Group) as Head of Learning and Development and with Kotak Mahindra Bank as Associate Vice President, Organizational Learning. He holds an MBA in Change Management and Organizational Behavior from Nottingham University Business School and a B. Tech from College of Engineering, Trivandrum.

Akhil Verma joins Paytm Money as new CISOAkhil Verma assumed the role of Chief Information Security Officer at Paytm Money. He was CISO at Airtel Payments Bank. With over 17 years of experience, Akhil has been associated with the banking and financial services industry and has worked with leading organizations like Canara Bank and Oriental Bank of Commerce. He was Assistant Vice President (IS & IT Audit) at Janalakshmi Financial Services and has also worked with Fincare Small Finance Bank as Senior GM & CISO. Akhil is a Certified Information Systems Security Professional (CISSP) and Certified Information Privacy Manager.

Kapil Punni is new Business Head at Tata CapitalKapil Punni has been appointed Business Head - Emerging Markets at Tata Capital Housing Finance. He was earlier with Muthoot Housing Finance Company as Senior Vice President & Head Business Development. Kapil has also worked with DHFL Pramerica Life Insurance as National Head DSA & DST Verticals and with DHFL as Circle Business Head.

Amit Singh joins PNB Housing Finance as CPOAmit Singh has been appointed Chief People Officer at PNB Housing Finance. He will be leading the transformation journey for the company across HR, corporate services and CSR. Amit has also worked with SBI Mutual Fund as Head, Human Resources, and with IDFC First Bank as Director and Business HR, and Senior Vice President. He holds an MBA in HR from ICFAI and licenses and certifications from Neuro Leadership Institute India & South Asia.


Shreeraj Deshpande moves to SBI General InsuranceShreeraj Deshpande has left Future Generali India Insurance to join SBI General Insurance as Head - Health Business. At Future Generali, he was Chief Operating Officer. Shreeraj has also worked with Bajaj Allianz General Insurance as Head - Health Insurance. He began his career with the New India Assurance. He has a Ph.D. from University of Pune and MMS in Marketing from Symbiosis Institute of Business Management.

Anand Pejawar moves to SBI General InsuranceAnand Pejawar has moved to SBI General Insurance as Dy. Managing Director. Earlier he was Executive Director at SBI Life Insurance, where he spent nearly 16 years in various roles such as Marketing, International, Technology & Innovation. His earlier stints were at Max New York Life Insurance and Kotak Life Insurance, and this is his first time in general insurance. He started his career in banking with a French bank Credit Lyonnais, after which he moved to Mashreq Bank and then into insurance at the turn of the century. Anand is a law graduate and a financial management post graduate. He has also done executive programs at ISB and Columbia.

Jairam Sridharan is Chairman, Pramerica Life InsuranceJairam Sridharan has been made Chairman of the Board of Pramerica Life Insurance. Jairam was with Piramal Capital & Housing Finance as Managing Director. He has also functioned as CEO at Piramal Consumer Finance and as CFO at Axis Bank. Jairam Holds an MBA from the Indian Institute of Management Calcutta.

Sushant Choudhury is President, Howden Insurance BrokersSushant K Choudhury is President & National Head (Government and PSU Practice) at Howden Insurance Brokers (part of Howden Group Holdings UK). He was earlier President and National Head (Government and PSU Business) at Howden India. Sushant has been on the boards of MSM Micro Finance and Bharat Re Insurance Brokers. He holds an MBA in Finance and Financial Management.

Manav Deep Sachdeva joins IFFCO TokioManav Deep Sachdeva has joined IFFCO Tokio General Insurance as Chief Manager - Digital. Manav is a financial services expert and a former analyst at Gartner. He has also worked with Egon Zehnder as a Research Associate. He has a B.Tech in IT from ITM.

People Track in Insurance

Arun Singer joins Muthoot CapitalM. Arun Singer has been appointed General Manager - North East at Muthoot Capital Services. He was Vice President & Zonal Head at WheelsEMI. Arun has also worked with Bajaj Finance and Fullerton India. He holds an MBA, specialising in risk an insurance from the National Institute of Management.

Niro appoints Laasyaa Chadaga as Head of Finance & StrategyNiro, the embedded consumer lending fintech company, has appointed Laasyaa Chadaga as its Head of Finance and Strategy. Laasyaa was former Vice President at Spark Capital Advisors. Niro had earlier appointed Ramkumar Venkatasubramanian and Viswanath Kommalapati, founders of FanDuniya, as part of its senior leadership. It had also onboarded Narendran Prabhakaran, who was Collections Head at Navi, as Head of Collections and Operations. Laasyaa Chadaga would be overseeing the finance function and driving the capital raising initiatives.


Presents

AWARDS 2022BANKING FRONTIERS

THEMEINNOVATE TO ACCELERATE

VENUE: ONLINE VIRTUAL PLATFORM

KNOWLEDGE PARTNER

Banking Frontiers has pleasure in announcing TECHNOVITI 2022 Conference that will recognize innovations in the BFSI and honor the innovators. We are extending our invitation to all the CEOs and CXOs and leaders

of the BFSI sector from all over the world to file their nominations for Technoviti Awards 2022 & participate in the event. We wish each and every stakeholder in the BFSI

segment is inspired to be innovative and innovate in each of their actions. Welcome innovators at Technoviti Awards & Conference!

About

Banking Frontiers is organizing the 9th edition of the Technoviti Awards from 4th - 5th March 2022. This will be an online event and a two-day conference which will be followed by the Technoviti Awards on Day 1 for Financial technology and Fintech innovations and Finnoviti Awards and Conclave for Financial Services and Technology Innovations. Innovate to Accelerate will cover interesting themes around: ecosystem building, Global expansions, Digital Acceleration, Investments, Trending technologies and much more.

Join us in Co-creating, Co-innovating and Rediscovring the growth of the financial services which is accelerating itself to newer growth trajectories.

Join the Finnoviti & Technoviti 2022 conference, Share your nomination with us, meet up with your potential partners and customers and engage,enroll and

transact. In short with Finnoviti, Technoviti the twin carnival of innovations, you can Innovate to Accelerate.

Technoviti brings you an ideal networking platform to showcase your innovation and meet senior executives of banks, CXOs of fintech’s, accelerators, regulators, and business domain.

Virtual Summit l 5th March 2022

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NBFCS DRIVE ON MULTIPLE FRONTS - Banking Frontiers

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