Reaching finances to hills of Uttarakhand, plains of Tanjavur

Reported by: |Updated: May 3, 2021

Babu Nair: What is the genesis of Dvara KGFS?

Joby CO, CEO of Dvara KGFS, discusses the MFI’s activities and its technological journey

Joby CO: The genesis lies in the fact that the financial inclusion efforts were not reaching remote rural areas/hilly areas/coastal areas and growing concerns around over-indebtedness because of the sole focus on micro-loans. Small MFIs were not getting enough debt funds for growth as their balance sheets were very weak. Regulators needed more research-based insights about the nature of the financial inclusion market, so that policies could be aligned to the realities of low-income households. There was an urgent need for more business model innovations and for more holistic financial inclusion approaches.

Our parent, Dvara Trust (formerly IFMR Trust) was set up in 2007 with a mission to ensure that every individual and enterprise has complete access to financial services. Dr Nachiket Mor was the founding Chairman and Bindu Ananth (formerly head of Development Strategy Group, ICICI Bank) was the founding President.

Dvara KGFS (formerly Pudhuaaru Financial Services / IFMR Rural Channel & Services) is the retail arm of Dvara Trust, set up to pilot the innovative Deep Dense KGFS model in the remotest geographies in India. Currently the model is being successfully implemented in coastal Odisha, hills of Uttarakhand and plains of Thanjavur, Tamil Nadu.

How have you been uplifting the lives of rural Indian and making a difference?

Dvara KGFS has worked extensively in remote rural areas, offering a range of financial products to its customers. Today, it is present in 9000+ villages in 48 districts in 6 states through 308 branches with more than 1.17 million customers. Our AUM as of March 2021 stands at Rs 11 billon with over Rs45 billion in loans disbursed, since inception.

We work on a unique model:


What is the uniqueness of your business proposition?

The uniqueness of our business proposition is the same as the uniqueness of the KGFS model. This model revolves around:

  1. Remote Rural – Operating in highly remote geographies of the country.
  2. High Tech & High Touch – last mile branches complemented by a variety of digital tools & proprietary technology platform.
  3. Wealth Management approach – charting out a customized customer journey using a Financial Well Being Report (FWR). The compilation of FWR is a one-of-a-kind customer enrolment effort pioneered by us. The report extensively covers the financial trajectory of the customer and her household and also her future financial goals. The FWR is then used for product recommendation to the customer.
  4. Beyond Credit – one of the few Indian NBFCs with a successful track record of executing a multi-product approach with a wide range of products spread across our Plan Grow Protect Diversify, or PGPD approach, explained earlier.
  5. Localization- one of the very few Indian NBFCs that hires from the local community, with a significant number of women front line staff.

This unique KGFS model has created significant impact on ground as shown in an independent Impact Evaluation Study led by Dr Rohini Pande of Yale University in collaboration with Prof Erica Field from Duke University and Prof Giorgia Barboni from Warwick Universities. The study used data collected from 2010-2016 on a sample of 4160 households to assess the impact of expanding financial access on households’ poverty and augmented this data with an additional 14,263 households for which the data on savings, income and poverty were available.

As per the study, the villagers’ economic activities are conditioned by their financial environment. KGFS-operated village households (treatment villages) are 6% more likely to have a household member working outside agriculture, have 10% reduction in informal borrowing levels, have 21% higher business sales, 7% higher total weekly wages, and 10% reduction in poverty levels. Secondly, women living in the treatment villages experienced significantly lower long-term stressful conditions than women in control villages.

Our business model has also shown an impeccable track record of profitability and efficient risk management in the face of sectoral events such as demonetization and natural disasters.

What technologies have assisted you in giving wings to your vision?

KGFS Assist is an inhouse solution developed for the branch channel that offers the customer relationship and loan origination suite. This includes digital field automation and a desktop solution for the branch teams and operational hierarchy.

Key features of this application include (i) customer enrolment (ii) multi-product loan origination workflows integrated with credit score, eSign etc. (iii) wealth management package (iv) unified customer payments solution for loan repayments and wealth management investments using multiple instruments such as cash, Aadhaar Pay, UPI, net banking and Bharat Bill Payment System (BBPS) Biller Solution (v) cash withdrawal, balance enquiry services using Aadhaar Enabled Payment System (AEPS) (vi) utility bill payment such as mobile recharge, water, electricity etc using Bharat Bill Pay System (BBPS) (vii) fintech integrations such as cattle loan underwriting, crop loan underwriting, Gold SIP integration, mutual fund integration, etc. (viii) daily planner for wealth managers using AI & location analytics (ix) realtime performance monitoring and automated incentive calculation, and (x) personalized dashboards for wealth managers.

KGFS Mitra is a customer engagement app for digital touch points which enables our digital agents to: (i) generate leads (ii) accept loan repayments, payments for insurance and other products, (iii) undertake balance enquiry, cash withdrawal & mini statement services via AEPS for the rural households, (iv) facilitate payment of utility bills, mobile recharge etc via BBPS for the rural households, (v) accept payments (MerchantPay) using BharatQR, AadhaarPay etc & vendor payment via UPI (vi) business tools for recording and consolidating income and expenses; simple tracking of outstanding payables and receivables; inventory, CRM, POS integration etc. (vii) facilitate money transfers, ticket booking etc. for the rural households.

WhatsApp Chatbot & MyKGFS app offer self-service capabilities for smartphone savvy customers such as (i) automated reminders on repayments (ii) instant access to FWR, loan balance, loan schedule, DSSP balance, etc. (iii) provide referrals and make new product request.

Inside Sales CRM App is a lead management solution for multiple products across multiple channels, with (i) call center integration for inbound & outbound voice communication (ii) Customer 360 for monitoring interactions across all touch points (iii) monitoring tools for operations managers.

At the back end, each customer at the time of onboarding is scored based on the past track record, debt service capability and other risk parameters. This is then updated based on the customer’s repayment behaviour with us thereby building a digital track record for each customer. We also have multiple applications built to improve the internal processes and controls for each function. Some of the key applications are FinEzy for finance  and accounts for vendor management, branch rent management, treasury management etc., Audit Tool for digitization of internal audit function, compliance tool for tracking and monitoring various compliances etc. All these tools help the functions to improve their processes and controls and aid them in improving their efficiencies.

What are the ecosystems you have created? What is unique about them?

Currently, Dvara KGFS has a strong network of uniformly branded 308 branches, served by 1200 plus wealth mangers in uniform spread across 48 districts in 6 states. Going forward, we intend to augment this physical channel with couple of other channels through our omni channel strategy. This will help us to provide financial services to our customers anytime, anywhere, in the most customer-centric and convenient ways possible. This will also enable customers to initiate a transaction on any channel and complete it on any other channel.

Digital agents and digital touch points are appointed in areas where opening branches would not be financially viable. These touch points are equipped with KGFS Mitra, enabling them to offer various products and services to the rural households. Digital Self Service & WhatsApp Chatbot helps view their existing product details and avail a host of services easily on WhatsApp anytime.

KGFS Direct is our relationship management cell for customer grievance redressal and inside sales. It helps in resolving the customer queries and providing quick resolution to their problems. It will also allow KGFS to cross sell or upsell other products and services to the customers.

What is your vision for better well-being in rural India?

The potential in the Indian rural markets is hugely untapped and with our next 5-year plan, with the impact that we will create with innovations in supply chain / value chain financing/ FPO funding/ crop / diary funding using tech assisted model to track crop / animals etc., we want to reach out to these markets and segments and solve their financial problems in the most innovative manner as possible.

For those market segments where there is enough visibility and market penetration that the main issues of ‘Accessibility, Affordability & Availability’ are taken care of through multiple interventions from the government and private institutions, we want to start looking beyond these 3 A’s and work towards 3Es – ‘Enrich, Enable & Empower’ – enriching the customer by doing a proper due diligence and trying to provide him/her a suitable product which suits them, rather than one size fits all and come up with a digital platform, which is intuitive and the customers would not feel scared to use; enabling them with multiple communication and delivery modules; and finally empowering them to take a guided decision, which would enable them to create wealth and also take care of them and their families.

Also, we as an organization are exploring strategic opportunities to expand our geographic reach through business acquisitions and widen the product scope through transforming into suitable legal structure including that of a small finance bank as this would help us to widen our product scope and give access to our rural customers to a complete array of wealth management products suiting their needs.

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