Covid may do for the lending industry, what demonetization did to the digital payments industry

Years of digital lending innovation, have been fast forwarded and crunched into these few months. The Acceptability and customer behaviour change, along with internal teams readiness to accept and adapt to digital technologies has gone up significantly. Magma Fincorp's Chief Digital Officer, Harshvardhan Chamria, speaks with EC's Abhishek Raval

Post the lockdown, what was your strategy to activate the BCP ?
Magma Fincorp moved swiftly to put in motion the BCP plan which was already in place. We provided a VPN for applications available through LAN. We were able to use certain applications available on the internet behind a firewall. All Laptops/desktops were securely hardened in the form of all ports being blocked (USB, etc). We also secured the web gateways to apply web filters. Zoom has been used for collaboration – waiting room, password, host consent for sharing, breakout rooms, etc have been enabled. Mobile hotspots were provided wherever internet was patchy to ensure smooth flow of work. Some rental laptops also were used and several desktops were moved to enable work from home. Virtual Desktop Infrastructure (VDI) has also been used to enable Bring-Your-Own-PC. Mobile Device Management (MDM) has been used to enable Bring-Your-Own-Mobile (for mobile email, sales/collection/survey applications, Shared folder, etc).

For how many days have you procured the necessary resources ?
Safety of our employees and customers is of utmost importance to us and until the pandemic subsides we would keep the necessary resources in place. The VPN and VDI will be required till WFH is in place. 95 percent of our 320 offices are open, although we are following social distancing by capping office capacity to 1/3rd of normal. Geographically, majority of our offices i.e. 65 percent of our offices are in the Green Zones and 20 percent in Orange Zones. Hardening solutions, secure web gateways, Zoom, VDI, MDM are all perpetual. While rental laptops were only for a period of 2 months (Lockdown 1.0 and 2.0).

Is there any time window for which the network resources will be made available during the day ?
All day availability is essential for seamless working and thus cloud solutions have been optimized for 12 hours operation (9am to 9pm).

Your BCP is as per recommendations of which industry body / vendor / international convention, etc
The Reserve Bank of India requires NBFCs to have an approved BCP by ITSC and RMC. Magma also used an external consultant to help evaluate our BCP readiness as part of our regular process.

How will employee attendance be posted in the system ? (will you calculate for how much time, the employee is logged in to the system)
Majority of our workforce is ‘Feet On Street’, who interact with customers and they conduct both sales and collections. In the normal course, they do not necessarily need to come to office, their initial set of activities during the day are logged through the mobile applications. We changed the attendance algorithm to mainly include customer connects through a survey application that we quickly created to understand how customers were dealing with the covid crisis. Our customers are farmers, truck drivers, taxi drivers, construction contractors, etc, so we designed specific questions, and did a large scale customer survey across over four lakh customers.

What about the feet on street (now since they will work from home and not make customer visits), are they doing virtual customer meets?
Our customers are part of India’s informal economy, most of whom are self-employed individuals. Around 80 percent of them have availed of the moratorium (1 out of 3 months, or more). We remain cautious on new business, and rather have been focusing on connecting with our existing customers, to ensure their needs are met. Either if their business is running, we are asking them to start regularizing payments, and if they are in need of cash to kickstart their business, then we are trying to use the government guaranteed credit schemes to extend credit support. Rural and Semi-rural customers are not open to virtual meets, so our employees are physically meeting them, while following all safety precautions. Moreover, they are in areas, which so far have been less or unaffected by covid. Digital agreement/payments are being used more aggressively and eSign is being used for digital agreements, eNACH for repayment mandates. Digital LOS allows loan processing entirely digitally without any human interaction for team members. Currently, 2/3rd of lending decisions are automated/credit rule-engine decisions.

Back end – Are you more reliant on public cloud ?
We have invested in both on-prem and public cloud usage. We have a hybrid cloud setup and use services of Microsoft Azure, Amazon Web Services as well as Oracle Cloud.

What kind of support did you get from your implementation partners ?
Some of our partners went beyond the call of duty, extended working hours, managing peak volumes/higher resource usage and with lots of remote configurations to be done. While some partners even gave us discount on fees.

Lessons learnt from the crises?
I believe Covid may be for the lending industry, what demonetization was for the digital payment industry. Years of digital lending innovation, have been fast forwarded and crunched into these few months. The Acceptability and customer behaviour change, along with internal teams readiness to accept and adapt to digital technologies has gone up significantly.

Co-incidentally, Magma had undergone a large-scale digital transformation just in time for covid. The entire lending process from logging the initial enquiry of the customer to disbursal of the money can now be done digitally, end-to-end.

Other initiatives – recently launched and to be launched?
At Magma we believe in investing in tech to improve the customer experience. Our digital lending transformation includes, the new Loan Origination System which enables the end-to-end digital loan processing, new Data Warehouse for data analytics, and now implementing eSign and eNACH for digitizing loan paperwork post approval. We are also in the process of considering VDI for a complete Zero Trust Architecture and Bring Your Own PC.

How are you preparing the backend for higher availability of your customer facing platforms ?
We are building redundancy in certain infrastructure layers, such as network switches, also having a DR (Disaster Recovery) setup for most of the critical applications. Several of our applications and databases are now hosted on the public cloud. Also cloud partners have a high availability architecture enabled by default.

What kind of features in your customer facing applications will drive usage in the times to come ?
Applications were not traditionally designed for self-service and India has traditionally been more of a tele caller-assisted market, however we expect the self-service journey to rise now. Not only with unsecured loans, but also with secured loans now. Instant gratification takes precedence with Millennials, and with self-service rising now, the need is even greater. There is need for lending to be more on the basis of scorecards & straight through processing is a requirement.

How are you planning to measure productivity of your teams ?
We are assessing our teams on Input, effectiveness, output and internal ratings. On the Input we assess activities such as customer visits measured via loan application. Effectiveness is measured by visits required per lead created and lead quality. For Output, we look at the number of loans disbursed, amount. And we have an internal rating calculator for NPS / FOS rating.

What kind of role change do you foresee for the young hires. How are you encouraging them to come up with ideas ?
The ability of an individual to be nimble and adapt is more important these days. The ability to innovate and try out new sales strategies and be on the lookout for ways to better service customer. Also the ability to spot opportunities for new revenue streams.

bcpHarshvardhan ChamriaMagma FincorpNBFCsnon banking finance company
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