Evolution and Future Prospects of NBFC in India, Ciju Peter, CTO at Emsyne Technologies

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By Puja Sharma

Muthoot Finance stands out in India’s NBFC sector through its expansive branch network, robust digital innovations enhancing customer experience, proactive adaptation to regulatory shifts, and strategic approach to overcoming digital transformation challenges, ensuring comprehensive financial services tailored for the digital age.
Ciju Peter, CTO at Emsyne Technologies
Ciju Peter, CTO at Emsyne Technologies

How does Muthoot Finance differentiate itself from other NBFCs in India?

With over 6300+ branches across the country, out of which more than 70% are in semi-urban and urban areas, Muthoot Finance has ensured that customers, irrespective of their location, have convenient access to their financial services. Established in 1887, Muthoot Finance has a long-standing history and legacy that builds strong brand trust and recognition.

While gold loan is our core product, Muthoot Finance has diversified its offerings to include personal loans, housing finance, microfinance, insurance, and money transfer services. In short, Muthoot Finance’s commitment to trust, customer-centricity, and competitive offerings position it as a leader in the NBFC sector, especially in gold loans.

Besides the branches, Muthoot Finance has integrated technology into its operations to improve customer service and operational efficiency. The company offers online payment options, mobile applications, and digital gold loan platforms, leveraging technology to enhance the overall customer experience. A highly scalable and secure home-grown digital platform, along with the adoption of the latest technology solutions like AI, chatbots, online payment options, mobile applications, and digital gold loan solutions, to enhance the customer experience.

In terms of digital transformation for financial institutions in India, what are the key areas to focus on?

In the context of digital transformation for financial institutions in India, key focus areas include enhancing customer experience and engagement through omni-channel interfaces, personalisation, and digital inclusiveness; promoting digital payments and transactions via UPI; utilising technology as an enabler for automated compliance management, real-time monitoring, and risk management. Harnessing AI-driven data analytics for customer insights, predictive analytics, and operational efficiency is also crucial. The right choice of digital platforms to promote financial inclusion, fostering innovation through cutting-edge technology solutions, and collaborating using open API interfaces are essential for maintaining competitiveness in the evolving financial landscape.

Can you share specific examples of digital innovations that Muthoot Finance has implemented to streamline its operations?

Digital and cashless technology solutions enabled at Muthoot Finance helped the company to streamline its operations and enhance customer experience. Digital Initiative like iMuthoot, Muthoot online allows customers to apply for gold loans, check their loan eligibility, and manage their accounts from the comfort of their homes. Digital Gold Loan (Loan @Home) service that allows customers to pledge their gold online and get the loan amount credited to their bank accounts without visiting a branch. AI-driven chatbots provide 24/7 customer support, loan application status, payment dues, and general information about services, thus improving customer services.

Adopting automation in loan processing, Muthoot Finance has significantly reduced the time required for loan approvals and disbursements. This includes the use of machine learning algorithms to assess the value of pledged gold and expedite the loan sanctioning process. Muthoot Finance has implemented advanced CRM systems to better manage customer interactions and data. To improve scalability and agility, we have a robust and highly scalable homegrown microservice-based lending platform.

How has the regulatory landscape for NBFCs evolved in recent years, and what future changes do you foresee?

The regulatory landscape for NBFCs in India has evolved to enhance stability, transparency, and consumer protection with increased supervision, stricter capital and liquidity norms, and better governance standards. Future changes are likely to focus on integrating NBFC regulations with banking standards, emphasising technology and cybersecurity, data privacy, data protection standards, financial inclusion, stress testing, and international regulatory alignment. These changes aim to create a robust, resilient, and inclusive financial system that can effectively support India’s economic growth.

What are the biggest challenges financial institutions face in their digital transformation journeys, and how can they overcome them?

Financial institutions face numerous challenges in their digital transformation journeys, including legacy systems, cybersecurity concerns, regulatory compliance, customer adoption, data management, cultural resistance, high costs, interoperability issues, rapid technological changes, and competition from FinTechs. Many financial institutions operate on outdated legacy systems that are not compatible with modern digital technologies, leading to inefficiencies and integration issues.

As financial institutions go digital, they become more vulnerable to cyberattacks and data breaches. Ensuring data privacy and security is of paramount significance. Encouraging customers to adopt digital services and trust them with their financial information can be challenging, especially in regions with low digital literacy. Interoperability issues, such as ensuring new digital solutions work seamlessly with existing systems and across different platforms, can be complex.

By adopting strategies that include upgrading technology, enhancing cybersecurity, leveraging tech collaboration and data analytics, fostering a culture of innovation, managing costs effectively, ensuring interoperability, staying agile, and embracing the latest technology frameworks, institutions can overcome these challenges and achieve successful digital transformation.

How has Muthoot Finance adapted its services to meet the changing needs of customers in the digital age?

Muthoot Finance has effectively adapted its services to meet the changing needs of customers in the digital age by developing online platforms and mobile applications, introducing digital gold loan services, implementing AI-assisted chatbots and automated loan processing, enhancing data security, offering personalised financial solutions, expanding digital financial services, and promoting customer education. Muthoot Finance has diversified its digital financial services to include personal loans, housing finance, microfinance, insurance, and money transfer services, catering to a broader customer base and reducing dependence on traditional gold loans.

Leveraging data analytics, Muthoot Finance offers personalised financial products and services tailored to individual customer needs and preferences, enhancing customer satisfaction and loyalty. Automation tools like chatbot help us to streamline processes, enabling faster response times and reducing wait times for our customers. Additionally, self-service options on websites or mobile apps empower customers to find answers on their terms. Continuous improvement and adaptation are essential when it comes to addressing modern customer needs effectively.

Monitoring feedback from customers regularly helps innovate and improve the customer service processes in tune with evolving customer needs. These initiatives have enabled Muthoot Finance to provide more convenient, efficient, and secure financial services, aligning with the expectations of modern, digitally savvy customers.

Emsyne Technologies is the software wing of The Muthoot Group, one of the largest business houses based in India. It has an upstanding presence in Financial Services, Information Technology, Media, Healthcare, Education, Power Generation, Infrastructure, Plantations, Precious metals, Tourism, and Hospitality, with a combined annual revenue of over US $100 million. Emsyne has been certified ISO 9001:2015 for Architecture, Design, Development, Testing, Implementation, and support of software products and solutions developed based on customers’ requirements.