Gurugram-headquartered Satin Creditcare Network Limited (SCNL) is today one of the leading microfinance companies in India. Founded by H P Singh, Satin Creditcare launched its operations as a provider of individual and small business loans and savings services to urban lenders in 1990, then getting registered with the RBI as a NBFC in 1998 and converting into an NBFC-MFI in November 2013.
With operations covering 1050 branches spanning 22 states and union territories across India, proactive adoption of technology has led the company witness robust growth under the leadership of its CIO, Sanjay Mahajan.
Mahajan, who had helmed the roles of Head of IT and Global IT Director in various sectors such as automobile, FMCG, retail etc., had to set foot on a new turf with no prior experience in financial sector. He joined SCNL in January 2016 and has been responsible to script a new success story for the company by implementing various IT initiatives and developing products/Apps in-house.
In an exclusive interview, Sanjay Mahajan shares how the company has been able to scale its business with the help of technology.Excerpts:
Q. What were the challenges before you when you joined SCNL as its CIO?
A: When I joined SCNL, it was already a Rs. 3000 crore company and had 435 branches. I saw that technology had been not at last mile, but at the regional level. The branches didn’t have computers and all the documents including the loan amount collected at the branch level was brought to the regional office.
Customer acquisition to loan disbursement journey used to be 18 to 20 days. Our month-end used to take 30 to 35 days from the actual start of the month. Coming from a non-financial background, this was like starting work from the basement. Yet what kicked me was adding value to the sector not keeping the lights on.
Q. How did the turnaround happen in SCNL's digital transformation journey?
A: Keeping in mind the Tier I, Tier II and Tier III products we had, I decided to conduct an in-house RFP (Request for Proposal) for eight weeks to evaluate what would work well for our businesses. We looked at various products such as Oracle Temenas, FIS Global and Craft Silicon etc. But, after the evaluation, we realised that none of these products met our requirement and we had to customise 30 per cent of our need. The cost was humongous as well, which required around Rs. 43 crore in the next five years. When we brought this before the management, I could clearly see an appetite to invest.
Despite our CMD expressing confidence that it can be done, I insisted that we build it in-house. I realised that if we lubricate the process we did during the vendor evaluation, it will be a great proposition to sell as well. It took me around four months to build a team of 12 people with an investment of Rs. 1.2 crore.
Instead of trying to attempt everything together, I decided to do an agile methodology by weaving the micro financial schemes first with the financial ERP and then follow up with other important businesses such as business correspondent (BC), MSME and housing.
It took around 80 days to implement everything. We did the UAT (user acceptance testing) for six weeks. In this period, the number of branches went up from 435 to 750 in 15 months while the number of customers too increased from 1.6 mn to 3.5 mn. The customer acquisition to loan disbursement cycle was brought down to few minutes. This changed the game for our business.
Q. How did you bring down customer acquisition time to three minutes?
A: Be it approval or rejection of a loan application, KYC process, Credit Bureau, real time bank account verification, QR codes, geolocation tagging – everything was done in three minutes. We were doing whatever was available in the technology and everything was API-based. All relevant documents of the consumer were scanned through the tabs carried by our ground staff.
With the help of our inbuilt technology, 90 to 92 % of our transactions have gone cashless, which is a big advantage. Reduction in our operational costs has been humongous since we implemented this technology and the disruption we have created.
Q, What are the other technology initiatives implemented at SCNL?
A: We have geotagged our customers’ house locations and our branches. We can monitor if our staff are online or offline. On top of this, we have implemented the mobile devise management (MDM). When our field staff complain of connectivity issues at a particular place, our MDM tool tells them to charge their mobile first. Even the information collected at 12 midnight or as early as 7 am in the morning can be viewed by our CMD to down the hierarchy.
Going a step further, we have used technology to enable OSV (Original Seen and Verified) for KYC and other relevant documents. When documents are scanned, the different pages are merged into one sheet and a system-generated water mark stamp is put on the paper, which gives details about who did the OSP. This saved both time and money for the customers. Of the 3.3mn customers, we collect money from 3.75 lakh customers through tabs every day. It is like a Cricinfo kind of a dashboard, which gives ball by ball information. We can see the business happen every two minutes.
Q. Tell us how SCNL has integrated a robust information security management system?
A: Whatever technology we have in place, our main focus is information security because we are dealing with financial data. We have taken information security to much superior levels. We give our applications to ethical hackers every six months to hack it. We want them to crack and kill our application. If there are any vulnerabilities, we will manage it in advance.
In addition to complying with the RBI Master Guidelines, we have got ISO 27001:2013 certification, a Gold Standard in Information Security. Every data handled by SCNL and all the technology assets of the company are totally encrypted. Even if I lose my laptop, nobody can crack my data. As per the ISO recommendation, every document generated in the company must be classified.
Q. How did the change management happen while implementing technology at ground level?
A: Our Customer Service Officers (CSOs) in Tier 5 and Tier 6 villages had never used computers/smart phones before. We had to train them from the basics. We had to bring in change management to make our ground staff as well. Training around 5000 people on the ground at the last mile wasn’t all that easy. However, it was a great feeling for the customers when we took technology to the last mile.
Rural areas always faced connectivity issues. To overcome this, we built our technology in such a way that it works in an offline environment as well. So, the ground staff used to log in to the tab at the branch itself using WiFi before heading out. Once they login in the morning, they would be good to go the whole day. They would have all the applications in the tab to do their business seamlessly. Whether the connection is there or not, his work wouldn’t suffer. Whenever they enter an area with good signal, without any intervention, the data would get pushed to the central server.
Q. Could you tell us about Loan Dost?
A: Loan Dost is our digital lending platform for short to medium term personal loans.
The application, developed in house, is available on Google Play Store for Android users and can be used for availing instant loans up to 25,000 in the first phase. Everything here is API-based - from finding the genuineness of a consumer or verifying their records etc.
Q. Could you elaborate on the process of administering psychometric tests to potential borrowers?
A: In a bid to build a quality loan portfolio, we thought of administering psychometric tests to potential borrowers. Implemented in Jan 2019, this statistical tool helps us gauge the borrower’s intention to repay the loan. It helps us to check if the borrower’s address is genuine or not. Everyone does Credit Bureau, but nobody does Psychometric in micro finance.
Q. What are your future plans?A:
Our focus area for this year is to restructure our 1050 branches by putting up shared service centers with a call centre of 100 people. They will work real time in two shifts from 7 am to 8 pm to verify, accept or reject an application. For our Loan Dost, we are setting up a shared service centre to churn out that business further.