Finance, along with healthcare and education, has been a sector that has seen an extremely dynamic changing landscape during the COVID-19 pandemic. The sector, which had seen a steady rise in fintech companies, suddenly saw an increase in such startups seeking to conquer the digital finance space. Traditional financial institutions, despite their dominance in the sector, haven’t quite followed the nimble and fast-paced fintech startups.
Discussing the same and the fintech landscape in general, our team had an exclusive chat with Rahul Agarwal, Group CTO at Capri Loans. Here are some excerpts from the interview:
What is your overall view of the state of the Indian and global fintech industry?
The Indian fintech industry is growing rapidly and has the highest fintech adoption in the world. India has managed to build a vast network of FinTech segments such as Digital Banking, PayTech, InsurTech, RegulationTech among others. Due to the pandemic, real-time payments, fast loan disbursements, peer-to-peer lending, transparent insurance advice, etc. are now part of the fintech ecosystem. Along with technological developments in India, government initiatives have been a catalyst to elevate and accelerate the growth of fintech startups in the country.
India’s robust digital infrastructure is growing and proliferating rapidly, this combined with the bright talents emerging in our country, will be a big boost for the domestic fintech industry. Speaking of the global fintech industry, with the advent of crypto, blockchain, among other rapid advancements, has led to greater ease of access to global capital and services. These advances are helping to create an open and easily accessible global network of capital and financial services.
A common trend seen in major developed economies is the large share of MSMEs in overall GDP. In India, this share is still very low. How do you see MSMEs using the power of fintech to further contribute to India’s $5 billion economic target?
The potential of Indian MSMEs is immense but they face some challenges. It’s about access to technology, funds and a talented workforce. What fintech will help solve starts with the problem of access to capital by providing affordable and easy access to credit, which is the main obstacle for many. Providing alternative sources of capital, fintech is slowly replacing the need for MSMEs to turn to informal sources of credit that charge abysmal rates without support services.
The growth journey of MSMEs is boosted by access to affordable and reliable credit, accompanied by FinTech services (tax filing, credit scoring, risk assessment and management, etc.). This growth contributes to the adoption and implementation of technology, which helps streamline businesses, thereby attracting quality talent to businesses. It is a cyclical and holistic approach where we try to solve the challenges that will take these companies to the next level.
The fintech space is largely dominated by new-age tech startups. How do you see traditional financial institutions, such as banks/NBFC among others, fitting into the same situation? What are some of the innovations that these traditional institutions will need to make to not lose the fintech boom?
The way forward for many traditional NBFCs can be split into 2: those that will acquire/collaborate with new era FinTech startups and the other will be those that pivot and quickly adapt to changing times by implementing implements state-of-the-art technology and services.
In order to ride the FinTech wave, financial institutions must be prepared to constantly evolve due to the high rate of innovation and competition prevailing in the industry. Remaining adaptable to prevailing scenarios will also allow these institutions to increase their operational efficiency, develop and offer new lending and investment methods, reach larger markets and increase their profits, to list some advantages.
There are many innovations and technological advancements that are extremely helpful in keeping NBFCs competitive. Some of these are the application of artificial intelligence and machine learning technologies for increased automation, using cloud computing and its accompanying services and microservices, exercising the latest developments in data analytics. data and data science, etc.
In the above context, how is Capri Global adapting to these changing times and becoming a new era fintech company?
It’s a simple ideology, we maintain a technological approach to our products, services, procedures, etc. and constantly strengthen our internal capacities. This allows us to implement the latest technologies, automate our processes and stay competitive with the industry.
Currently, we are focused on building and improving our internal systems and strengthening our brilliant technical team. Keeping our systems and technology in-house allows us to be completely self-sufficient and facilitates scalability on our own terms.
Leveraging our data analytics and science, we constantly strive to deliver the smartest, most useful, and most personalized tools and products to our users. In addition to these digital initiatives, we have over 70% of our applications running on the cloud and are rapidly progressing towards 100%
Can you elaborate on some of Capri’s new digital initiatives, such as ease of banking for customers, increased transparency and dematerialization, etc. ?
We know the future is paperless and we have implemented this ideology to the greatest extent possible while adhering to RBI guidelines.
We have built a unique document processing engine that performs the necessary image processing and also assesses the quality of bank statements, payslips and other documents.
Launching soon, our gold lending platform is powered by real-time integrations and data analytics, which will ensure that a client’s gold loan will be in their account within 30 minutes.
The One Stop Shop app for our consumers will provide our users with 100% transparency on their loan account, payments, new loan applications, logins, etc.
It has been established for some time now that “data is the new oil”. What do you see as the role of data analytics in the fintech transformation process and how critical is it?
Consumer data is a huge asset for financial institutions. Using cutting-edge analytics, this data reveals trends, patterns, and user preferences, allowing us as institutions to fine-tune our products and services to deliver the best for our consumers.
Data analysis is extremely critical for institutions like ours. It focuses on reducing costs while delivering safe and reliable results, thereby reducing risk while increasing efficiency in operations. It also supports the integrity and security of our systems by actively detecting and acting on unusual transactions and fraudulent patterns.
Data analytics is extremely helpful in identifying new demographics, formulating consumer profiles, and developing a strategic plan to address them. Data analysis also paves the way for better risk assessment by leveraging various data sources.
At Capri Global, how do you leverage disruptive technologies and smart analytics to meet some of your customers’ unique requirements?
Keeping in mind our goal to meet the needs of low-income and economically disadvantaged social strata, we leverage smart technology to increase our accessibility and reach. Using disruptive technologies and analytics, we maintain a holistic view of market needs and wants and how to meet them.
Data is very essential, as we mentioned above; we ensure to provide accurate solutions to our consumers by using and implementing data analytics in our production and delivery strategy. For example, we may analyze a customer’s credit data and undertake risk analysis/scoring by inspecting outstanding debts, if any, and verifying whether the customer is making timely installment payments. By looking at this data we are able to look at potential red flags etc.
This allows us to obtain the best prices for our customers. By assessing credit history, we can provide better options in advance. The end result is that the consumer feels valued and cherished, leading to higher levels of satisfaction. Market and consumer expectations are constantly changing over time, as they always have, it is up to us as businesses to embrace and leverage technological agility to keep pace.