Dr Jasmine Gupta, National Product Head at Equitas Small Finance Bank, and Mridul Sharma, Chief Operating Officer at Arka Fincap, discuss the evolution of new digital products:
Ravi Lalwani: What are the most common changes in digital products in the last 12 months?
Jasmine: They say necessity is the mother of invention. The most important change in digital products in recent times are the ‘do it yourself’ nature of the products. The fastest innovation in digital products can be seen in terms of how to make the customer use the product themselves with ease, convenience, security and within the desired TAT. The speed with which banks have come out with digital accounts that can be opened within 5 minutes, using eKYC, eAadhaar and video KYC is exemplary. The same is the case with digital insurance, digital investments and digital loans.
The response of consumers has also been encouraging. More and more people from tier 3 & 4 centers with large unbanked population, are opening accounts and conducting their financial transactions seamlessly digitally. They now have access to products and services that they earlier could not imagine using sitting at home.
Mridul: There were physical steps in the lending process, which are not necessary now. Covid has made processes completely digital. If there are physical steps, the lending process cannot be executed in this environment. For example, for a loan against property, our valuation person must visit the property site, without which the loan cannot get disbursed. During the lockdown, no valuation person visited the property and that made people think of other ways of valuing the property. In 4-5% of instances, the valuation person has to compulsorily visit the property site, but in 95% of cases, valuation can be done based on the data available in the market. The adoption of digital technologies, mobile devices and the internet has made things easy where you do not have to move.
What drives the changes in digital products? What is the impact?
Jasmine: The omnipresent digital infrastructure that got a boost in the prevailing ‘stay, work, play, eat, shop, bank at home’ scenario has given enough impetus to digital products and their adoption, such that the change seems long term and sustainable. The next innovations that we see in this space in terms of digital servicing through Robo agents or digital engagement through Jio glass-like virtual interfaces, video interactions, etc., will help take the entire digital customer experience to an altogether different level.
Mridul: There will be no option of physical meeting in the coming months – employees must rethink other ways of meeting the customers. We have no impact on covid lockdown – whatever work we were doing in the office we can do it from home. It is time to push people to rethink, people must move out of their comfort zone. Many lenders are trying to think about the whole risk model. We do not know till when the moratorium will be in place and what is the actual risk will emerge. The products are the same; it is the volume that has made a major difference. For example, in consumer durables finance, if consumer durables sale is not happening, then how will the finance happen? A lot of it has shifted to credit card-related EMI products and banks may be the winner in some cases.
Your views on future scenarios for digital products.
Jasmine: The cost of acquisition of a digital customer is 10 times lower than that of acquiring through the physical route. Also, it is possible to have a higher level of digital engagement with these customers in terms of personalized digital offerings, as they are already digital savvy and have a strong digital footprint. Most of these customers are millennials in the age bracket of 25-40 years who have grown up with digital technology and who form the biggest working-class population in the country.
Even for employees, innovation in digital learning products is helping up-skill and perform better on the job. Artificial intelligence and analytics based digital products enable organizations to send out personalized learning triggers based on the employees’ on-the-job performance so that the employee can learn, upgrade and improve skills through real-time digital learning experience. The current pandemic has turned out to be a digital blessing in disguise for companies, consumers as well as employees.
Mridul: We are active on the wholesale finance side. There is a requirement of money in it and there are very few people to offering this. Many NBFCs do not have funding and liquidity in place. We have received less business in March, April and May, but from June onwards the situation has been improving and we were expecting Rs6 billion business for wholesale banking. But we are now getting business worth Rs8 billion, an addition of Rs2 billion. In the current situation, banks and NBFCs do not have money to lend, except a few like us.