V Raman Kumar

V Raman Kumar

Chairman, CASHe

1. What is your take/comments on the Evolution of digital platforms, disrupting the way of banking – Do you think it will help faster the economic development, increasing accessibility or will it increase fraudulent activities?

With the advent of digital experiences, the relevance of traditional banking is changing as quicker and simpler digitized processes and services continue to replace old legacy systems. Digital platforms are enabling fintech companies to serve thin file customers, offer superior customer experience and save massively on costs. Hence, the new age digital lenders through their platforms who have identified the potential for disruption in nearly every component of the banking value chain, are now breaking down the existing  aggregated processes into distinct components which are now being powered by the latest technology.

Digitization of the financial process has played a key role in the overall economic progression of India. It has helped Indians move from cash transactions to digital transactions be it debit cards, credit cards or mobile wallets has proved to be a major propeller in the economic development.  The government is constantly working towards cashless payments by restricting values of cash transaction and incentivizing digital payments. Digital lending companies have now set up open architecture layers such as Aadhaar, UPI and Bharat Bill Payment Systems; which will go a long way in boosting digital and data-enabled lending. Fraud prevention is a strategic goal for lending companies as they are now increasingly using latest technologies like AI and Machine Learning to help detect fraudulent activities in their transactions. A fine-tuned machine learning solution can detect up to 95 percent of all fraud and minimize the cost of manual reconciliations, which accounts now for 25 percent of fraud expenditures.

2. What is your take on Ease of Lending through digital platforms as an emerging scenario, are the seekers being benefitted to large extend as the ground reality?

The digital lending firms are continually evolving the digital lending ecosystem. The platforms in this space leverages technology to offer loans that are faster, more cost-efficient, and more straightforward for the customer. It is proving to be a  potent force for reaching people who haven’t been able to access financial services in the past. They have overcome the challenges of geography, reduce cost and increase transparency in their dealings with the customers. According to a report, nearly 50 per cent of loan seekers with Internet access applied for or purchased a loan digitally over the last 12 months, showing that consumers across loan types are now digitally ready.

3. In your opinion, state 1 boon and 1 threat of such revolution in seeking funds

The digital lending initiative has grown exponentially. Today ordinary citizens are very comfortable applying for financial products, making payments, and managing their financial lives digitally. Fintech startups have revolutionized the way lending works by making significant transformations in the lending process. Today, the amount of money borrowed can be as low as Rs. 1000. The availability to borrow as you go are enabling the wider population  to have greater accessibility to emergency capital in ways that has never happened in the past. However, despite this, the biggest challenge for online lenders remains the lack of data and diversified information. The biggest challenges in India are around authentication/KYC of the customers (although Aadhaar has helped greatly) and digital collections. For the digital lenders most of the challengers are related to fragmented information and unavailability of data. We have put systems in place to take an automated and systematic decision on every application, but in a majority of cases, manual intervention is required due to absence/unreliability of data.

4. Your views on The Economic Times BFSI Innovation Tribe and how important do you to feel is the need of organizing such summits, that we all can collaboratively work towards the common goal.

The Economic Times BFSI Innovation Tribe is a great platform for fostering dialog on the industry between leaders in the field and contributing to increased awareness of the industry. It offers an excellent platform to share industry best practices, strengthen understanding and knowledge of other players in the industry and gain insights on emerging technologies and also will help drive progressive regulatory approaches to help the fintech sector to grow.