NBFC: RECOVERY POST-COVID & THE FUTURE WITH DATA ANALYTICS ADOPTION

Originally Posted: Nasscom

With more freedom than banks, Non-Banking Financial Companies or NBFCs — an essential pillar of the financial ecosystem — have the greater risk-taking capacity to engage in financial intermediation. While the Covid-19 pandemic had led to a huge upheaval in the space, overall consumer credit spending in this financial quarter has increased.

Now with the receding impact of Covid, non-bank lenders are likely to report better quarterly performances. Additionally, confidence among consumers is at an all-time high, especially when it comes to retail loans and services. For example, if we look at the real estate market, home loans have had a 11.2% growth in a six-month period, versus 11.8% for the whole chunk of FY21. Similarly, this is true for other retails loans such as vehicle loans, and even when we look at the consumer durables market — all of which indicate a pick-up in economic activity. Funding into India's NBFCs-MFIs (microfinance institutions sector) has also grown with higher loan disbursement as well as repayment collection from borrowers.

NBFC Recovery & How to Identify Opportunities for Growth with Data

With companies gearing up to show strong sequential growth of assets under management and their guidance expected to be strong — we need to think about what strategies can be put in place to serve the increasing demand over 5-10 years. Right enterprise strategy brings people, processes, data and technology together for organizational and customer success.

Considering the vastness of this sector, companies must assess the time and money they spend to plan out the strategies and monitor the outcomes. Especially in the current era, when the market has advanced offerings to empower users to expedite such activities by improving their planning and analytics processes.

Consider a cloud-based solution that delivers immediate post-sale information on exposures, outstandings, credit/deposit rates, product terms, treasury rates, and relevant figures to anyone with access along with complete data integrity and security, enabling users to drive actions from insights within the platform with the capability to run scenarios and compare outcomes to identify the most suited action. Multiple people can interact with the same data in their own ways by means of personalized access and views.

A point in case — lending businesses use data to perfect their payment processes by including real-time transaction reporting and data analytics which provides a bird’s eye view of the lender’s payment activity, improves visibility of outgoing and incoming payments and the ability to make quick decisions leading to quickly rolled out action plans. With the use of data analytics, businesses can have automated tools which results in a reduction of interruptions in payment cycles, repeat billings, etc.

Overall, connected analytics can help enterprises sense the nerves of the firm’s funding activities and disbursements, compliance and regulatory adherence and guidance, provide timely recommendations with detailed analysis and reports to support informed decision making on strategic initiatives, drill-down analysis for reports to find underlying root causes and identify ‘what-if’ analysis and scenario planning.

The need of the hour is to consider adopting a cutting-edge analytics strategy to solve some of the most critical industry challenges and bring about the data-led transformation of the existing business processes. In order to stay ahead of the curve it is important to implement end-to-end digital transformation of your data.

Reimagining NBFCs and the Future of Enterprises

What we need is fully integrated unified platforms that can enhance the user experience, and push discoverability and execution for all stakeholders involved. With more digitization, we can redefine legacy systems and the way enterprises and users transact on a daily basis. Data can also help perfect the disbursement and collection processes by streamlining it and identifying areas to work on. It can provide businesses with the right tools to deliver a more seamless customer experience. Deepening customer engagement results in happier customers translating to increased revenues.

With a data-driven approach, businesses can sustain profitability and longevity as well as fully understand customer needs and preferences. By incorporating emerging technologies and tools enterprises can not only offer seamless and innovative financial services but also traverse the difficult decision-making process and make informed decisions.

Author — Ankit Goyal, Vice President, Healthcare & Financial Services, Polestar Solutions