By Piyush Shukla
The Covid-19 pandemic has accelerated the pace of customer acquisition through digital channels by non-bank financial corporations (NBFCs). Several non-bank lenders have focused on digital channels for loan applications and even the approval process, which has contributed to business continuity.
“Digital platforms have not only enabled business continuity during the lockdown, but have also helped us process larger volumes more quickly and efficiently. Our increased focus on processing loans online during foreclosure, coupled with our swift response, has kept our services transparent and uninterrupted, ”Renu Sud Karnad, Managing Director (MD) of Housing Development Finance Corp told FE. (HDFC).
Karnad said that by the end of September, HDFC had received 89% of new loan applications through digital channels, a substantial increase from less than 20% before the pandemic. The non-bank lender saw an average spike in website traffic of 16.44% after March 2020, while there was a 35.58% increase in leads generated online. As of September 30, HDFC’s outstanding loan portfolio, after liquidation of the loans, stood at Rs 5.21 lakh crore, up 10% year-on-year.
Mid-sized non-bank financial firm Shriram City Union Finance is also focusing more on digital means to increase lending and depositing business. The company currently receives more than 60% of its collections via the digital mode where customers can pay through digital wallets or a hyperlink generated by the company.
Speaking to FE, Managing Director and CEO of Shriram City Union Finance, YS Chakravarti, said that the NBFC’s fixed deposit program, launched nine months earlier, had enabled it to raise Rs 20 crore every month of consistently over the past three months. The NBFC is now targeting Rs 100 crore in deposits every month by next year. The fixed deposit program is a completely digital and paperless journey for the customer, said Chakravarti.
On the asset side, currently Shriram City Union Finance generates 20,000-22,000 online loan applications per month, which is significantly higher than the 2,000 applications received digitally before March 2020. Chakravarti said the company expects to what 25% of the total volume of loans over the next 12-18 months to come from digital mode.
The NBFC website currently registers more than 3 lakhs of clicks each month, more than 10 times more than the 20,000 to 30,000 clicks received before the pandemic hit India. At the end of September, Shriram City Union Finance’s total assets under management stood at Rs 30,425 crore, up 10.5% year on year. automated a host of self-service features for our customers, ”said Chakravarti.
To ensure social distancing and secure contact with customers during the pandemic, gold lending financier Muthoot Finance launched its ‘Loan @ Home’ mobile app in July 2020 and, to date, it has registered around 10,000 downloads. NBFC gross loan assets under management at the end of September stood at Rs 55,146.8 crore, up 17% year on year.
According to most non-banks, they are adapting their technology products to meet customer needs and to reach new geographies. “We have integrated disruptive technologies such as natural language processing (NLP) and machine learning (ML). This integration has allowed us to offer seamless services through our website chatbot by understanding and analyzing user intent, responding effectively to user interaction and thus providing an improved user experience ” , Karnad said.
In addition, HDFC also launched ‘HDFC Now’ – a fully digital add-on loan for existing customers and began offering content on its website in six regional languages, including Hindi, Marathi, Tamil, Telugu. , Malayalam and Kannada. While digital lending allows for faster disbursements, there are also issues that need to be addressed to protect the interests of clients.
In a speech on October 22, Reserve Bank of India Deputy Governor Mr. Rajeshwar Rao said, “We have been and are inundated with complaints about harsh recovery practices, data privacy breach, an increase in fraudulent transactions, cybercrime, excessive interest rates and harassment.
He added that governance is more a cultural issue than a regulatory issue. Therefore, NBFCs must create a culture of responsible governance where every employee feels responsible to the customer, the organization and the company. “Good governance is the key to long term resilience, efficiency and may I add, survival of entities,” he said.