NBFCs DRIVE ON MULTIPLE FRONTS - NABARD Turtlemint - Banking Frontiers
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Vol. 20 No. 8 December 2021 `75 Pages 56 Turtlemint pg 6 Indian Bank pg 14 Future Generali pg 24 JM Financial pg 33 NABARD pg 38 www.bankingfrontiers.com www.bankingfrontiers.live NBFCs DRIVE DIGITAL TRANSFORMATION ON MULTIPLE FRONTS
KNOWLEDGE PARTNER Presents BANKING FRONTIERS 2022 THEME INNOVATE TO ACCELERATE Virtual Summit l 6th March 2022 The Pandemic aftereffects are slowly fading and the economies are rising. There is a new optimism in the air, newer opportunities. Organisations are now stepping up the gas on growth by hiring more, investing more and experimenting more. One of the most important boon is the quick transformation into the world of digital. The world of remote meetings, remote events, remote customer onboarding, servicing and the acceptance to a world of digital possibilities and innovations. It is in the midst of these possibilities that Banking Frontiers presents its 11th Finnoviti and 8th Technoviti Awards and Conclave 2022 with the Theme: Innovate to Accelerate. This is going to be a two-day conference which will be followed by the Technoviti Awards on Day 1 for Financial technology and Fintech innovations and Finnoviti Awards and Conclave for Financial Services and Technology Innovations. Innovate to Accelerate will cover interesting themes around: Ecosystem building, Global expansions, Digital Acceleration, Investments, Trending technologies and much more. Join us in Co-creating, Co-innovating and Rediscovring the growth of the financial services which is accelerating itself to newer growth trajectories. Join the Finnoviti & Technoviti 2022 conference, Share your nomination with us, meet up with your potential partners and customers and Engage, en-roll and transact. In short with Finnoviti, Technoviti the twin carnival of innovations, you can Innovate to Accelerate. Call for Nominations! For details contact us ASHISH VERMA +91 - 98332 36943 ashishverma@glocalinfomart.com STALIN SALDHANA +91 - 91677 94513 stalinsaldhana@glocalinfomart.com
Editor’s Blog Manoj Agrawal Mobile : 98673 66111 Email : manoj@bankingfrontiers.com December 2021 - Vol. 20 No. 8 Group Publisher : Babu Nair Group Editor : Manoj Agrawal 2022 could be a Editor Editorial : N. Mohan Mehul Dani, Ravi Lalwani, Aditya Arya glorious year T Research Editors hroughout the year, I have written about business and technology and risk V. Babu, Ratnakar Deole, and compliance and more. Since this is the year end, let me look at people in W.A. Wijewardena, Sanchit Gogia, this final edit. K.C. Shashidhar, Dr L.S. Subramanian, 2021 has no doubt Ajay Kumar been a disaster in Advisor-Alliances many ways for many Ateeq Siddique people. Without Marketing dwelling further, I Kailash Purohit, Wilhelm Singh, also observe that it has Dhara Thobani, Rohit Kahar, been a tide that has lifted many people. Events & Operations Shirish Joshi, Stalin Saldhana, The talent demand has grown dramatically during the year, especially in some Pramod Jadhav, Ashish Verma, key areas like cybersecurity, data science, machine learning, payments, open Ramesh Vishwakarma, banking, risk management and many others. All these areas have experienced a Sushant Tulapurkar rapid level of growth and transformation, which is being powered only by human intellect. This tide has lifted those who are already in these areas and those have Design Somnath Roy Choudhury, joined in recently. Sudarshan Herle Another interesting development is that more and more people are going ahead and doing short term courses to augment their knowledge and advance Published By their careers. I see more and more posts on Linkedin where people post what new Glocal Strategies & Services course they have done and got certified. This is a good indication that there will D-312, Twin Arcade, Military Road, Marol, Andheri (E), Mumbai 400059, India. not be a situation of an extreme talent crunch in the years ahead. For institutes Tel: +91-22-29250166 / 29255569 and organizations offering such courses, this a fertile ground. Banking Frontiers Fax: +91-22-29207563 too offered a couple of master classes on AI in Financial Services. We hope to scale up these master classes further in 2022. One area where most large financial organizations are hiring is at the frontline. Printed & Published by Babu Nair on Organizations that have a large customer base and are looking to expand further, behalf of Glocal Strategies & Services and are boosting their fontline workforce to acquire new customers and to cross-sell Printed at Indigo Presss (India) Pvt Ltd., to existing customers. Technology helps engage with the tech savvy customers, but Plot No. 1C/716, Off Dadoji Konddeo Cross for the masses, a first-time purchase of an insurance policy or a mutual funds or a Road, Between Sussex and Retiwala Indl. home loan will not be a click-click-click process. Even for the tech savvy, assisted Estate, Byculla (E), Mumbai 400027. models are growing for complex products. Editor: Manoj Agrawal (Responsible for So, let me end with the thought that 2022 promises to be a year of a variety selection of news under PRB Act) of positive transformations – for individuals as well as organizations – and we at Banking Frontiers look forward to sharing such developments with all our readers. Banking Frontiers December 2021 3
N E W S Regulator Bangladesh to have cybersecurity response team The Bangladesh Russia norms for banks Bank is setting up an financing eco-friendly projects emergency response The Bank of Russia proposes to ease team for the financial capital requirements for banks that lend sector, Fin-Cert, to money to eco-friendly projects and raise a v e r t c y be r a t t a c k s . them for those giving loans to firms that Bangladesh had faced do not disclose their ecological impact. a major cyberattack 5 Russia is the world’s fourth-largest emitter years ago when hackers of greenhouse gases and relies heavily managed to steal $81 on fossil fuel exports. The central bank million from the central bank’s accounts with the Federal Reserve Bank of New will take climate risks into account when York. A senior official of the central bank said Fin-Cert will exclusively concentrate making regulatory decisions on so-called on the financial industry for emergency security and will take measures to stave green and less eco-friendly ‘brown’ projects. off any possible cyberattacks. The measures it will take include malware threats It is expected that the proposal should to banks from hackers, which the banks are not able to counter. The banks will help Russian companies attract extra then share the issue with the Fin-Cert platform anonymously and also alert other investment, including from abroad. banks and check if anyone else is having similar problems. If any banks have a solution, they will share the information on the platform. Fin-Cert will also monitor the banking sector’s cyber security situation and provide necessary support and New Governor for advisories to help prevent probable and imminent cyberattacks. Qatar Central Bank RBI working out details on CBDC implementation The Reserve Bank of India is working out a phased implementation strategy for introduction of Central Bank Digital Currency (CBDC) by examining use cases to avoid any disruptions, the Government said. The RBI has moved a proposal to this effect to enhance the scope of the definition of ‘bank note’ to include currency in digital form. The government told the country’s Parliament that the purpose of creating a digital currency is to provide significant benefits, such as reduced dependency on cash, higher seigniorage due to lower transaction costs and reduced settlement risk. The new digital currency would also possibly lead to a more robust, efficient, trusted, regulated and legal tender-based payments option. Indonesia, UAE central banks sign agreement The central banks of Indonesia and the United Arab Emirates (UAE) have signed an agreement to boost payment system cooperation. The agreement is focused Qatar’s ruler, Sheikh Tamim bin Hamad on safer and more efficient transactions, cross-border payment systems and anti- Al Thani has appointed Sheikh Bandar money laundering and anti-terrorism efforts, the 2 central banks said. A statement bin Mohammed bin Saoud Al Thani as the issued by the UAE’s central bank, the partnership aims to improve collaboration Governor of the Qatar Central Bank. Sheikh in payment systems and digital financial innovation, including conventional and Bandar has spent most of his professional Islamic finance. The Bank of Indonesia said the agreement shows its commitment life in the financial and regulatory sector. to fighting terrorism funding and money laundering, while also helping the country Prior to his appointment as the Governor of become a member of the Paris-based Financial Action Task Force (FATF). the Central Bank, he was Head of the State Audit Bureau. He has also held the position Saudi Arabia to give more licenses to digital banks of President of the Arab Organization of Saudi Arabia is giving operating licences to more digital banks. Saudi Central Supreme Audit Institutions (ARABOSAI) Bank Governor Fahad al-Mubarak said the Kingdom had issued license for its first and Chairman of the Executive Council of digital banks - STC Bank and the Saudi Digital Bank this year, after the Council of the Organization. He has also held several Ministers approved license for 2 local digital banks. Following this, STC Pay was senior positions in the Qatar Central Bank, converted to STC Bank with a capital of SR 2.5 billion and the Saudi Digital Bank where he started his career in the Credit and came into being with a capital of SR 1.5 billion. Al-Mubarak said Saudi Arabia Banking Supervision Section, and joined the has a cross-border digital currency scheme with the United Arab Emirates. He Investment Department as head of trading also pointed out that there is a unified currency for the clearing system among and managing the foreign exchange reserves the banks in the region. This, he added, has given the country the ability, which at the central bank. He has an Executive exceeds the capability of any others in the region, to move to digital currency at Master of Business Administration (EMBA) the regional level. from the HEC Paris. 4 Banking Frontiers December 2021
Neobanks US neobank SoFi has members, and not customers SoFi is a unique financial services institution in the US, that mostly finances student loans, but is a successful model for neobanks: U S neobank SoFi, or Social Finance, Facebook, and which include daily podcasts was originally a student-loan and newsletter. It also includes third-party platform, but now it aims to be a content, using data to determine what source for everything in personal finance. is most relevant to a particular user. Its Headed by Anthony Noto, who was customers can enjoy learning freely from instrumental in Twitter becoming a global a certified financial planner or avail free platform for information, and had worked estate planning services. The neobank plans with Goldman Sachs as its Managing to have a customer base of 3 million by the Director, SoFi today offers personal and end of 2021. home loans, investment services, small- While SoFi at the moment does not business financing, a credit card and several have a banking charter in the US, it is other financial products. It considers its regulated by 50 states for lending, which customers as members and encourages means it has to comply with 50 different them to avail more than one financial sets of compliance rules. It has in March offering, a strategy aimed at cutting down this year, acquired California-based customer acquisition costs. In the process, community bank Golden Pacific Bancorp it is creating for the customers a high-level for $22.3 million and through it hopes to One unique thing about SoFi is that it seamless experience. obtain the national bank charter. By being does not use credit scores, or FICO scores, In May 2021, SoFi became a publicly a bank, SoFi will be able to offer more loans from any of the US’s credit bureaus traded company, called SoFi Technologies, and no longer have to limit its number of to determine the creditworthiness of following a merger with Social Capital mortgages. The license will also allow it to its customers. It has its own AI-based Hedospophia Holdings Corp. It is now a determine its own interest rates instead of underwriting model that examines leading, publicly traded consumer-focused relying on a sweep partner. free cash flow, professional history and financial technology platform on Nasdaq. SoFi has partnership with 6 banks, education in addition to a history of It raised $2.4 billion in cash proceeds including Metabank, Hills Bank & Trust, responsible bill payment to evaluate from the transaction, which it intends EagleBank and Wells Fargo. its borrowers and to increase customer to use for growth, market expansion and The neobank intends to become engagement. It does not take deposits development of new product offerings, profitable on a GAAP basis by 2023, and finances its loans through venture as well as for geographic expansion and projecting $200 million in GAAP net capital, bond issues via securitization and building the first digital one-stop-shop for income in that year. While its revenue debt financing. It has its own hedge fund members to ‘borrow, save, spend, invest comes from lending, it expects the to purchase the loans it issues. and protect’ their money. At present, business to become more balanced by its offerings mainly constitute student 2025 with greater revenue from financial STUDENT LOAN REFINANCING loan refinancing, mortgages, personal services and the company’s technology SoFi today is the largest provider of student loans, credit card, investing and banking platform. loan refinancing, with over $5 billion dollars through both a mobile app and desktop in loans funded. Unlike traditional lenders, interfaces. Its target customers are ‘high BUYING GALILEO its proprietary underwriting approach earners not well-served’, or people who SoFi now owns the Galileo platform, takes into account merit and employment have taken out financial offerings from which it acquired in April 2020 for $1.2 history to offer unique products that its multiple institutions. billion. Salt Lake City-based Galileo is ‘members’ will not find elsewhere. the API standard for card issuing and is SoFi’s key milestones are: NEWS FEED FOR CUSTOMERS the platform that powers world’s leading u $5B+ total loan originations Noto, who has vast understanding of fintechs, financial services providers and u Secured $1B in Series E funding in technology and finance, believes that no investment firms. The platform uses APIs to September 2015, the largest single one in the past had really built a financial enable enterprises build financial services financing round in the fintech space services experience on one digital platform offerings. The APIs enable account setup, to date and used data to drive great value. funding, direct deposits, money transfers, u First rated P2P securitization Something unique that Noto has designed bill payment and other capabilities. Galileo u $2 billion + in securitized products issued for SoFi is a feed of financial information now provides SoFi’s main technology u GAAP profitable like the news feeds on Twitter and infrastructure. mohan@bankingfrontiers.com Banking Frontiers December 2021 5
Insurance & Technology How Turtlemint sells 10,000 insurance policies every day The platform provides advisors with digital tools enabling them to sell multiple insurance products of different companies through one single app: F ounded in 2015, India-born to issue an insurance policy instantly insurance platform Turtlemint online to our prospective buyer. We have has a unique online-offline model. been able to create India’s largest PoSP Dhirendra Mahyavanshi, Co-Founder, network of more than 1,25,000 advisors. explains: “Our hybrid model empowers This indicates a 161% increase in PoSPs insurance advisors across the country over the last year. A majority of our PoSPs with digital tools to navigate an otherwise - approximately 76.5% - fall in the 22-40 cumbersome offline selling process at years age group, who are highly tech scale quickly. We have grown significantly savvy. From a geographical presence since inception via our user-friendly and perspective, approximately 9.33% are innovative digital platform.” from tier 1, around 26.4% are from tier 2, and a significant 64.27% are from tier MOBILE APP, SEAMLESS SELL 3 cities.” One of the main reasons why Turtlemint The app allows the insurance advisors has been able to achieve good growth to upskill by providing access to a is because it has not lost sight of its comprehensive online skill development overarching goal to improve insurance program. Dhirendra further says: “The penetration in the country by leveraging program offers 70+ courses ranging the right technology tools. It currently Dhirendra Mahyavanshi from insurance advisor certification to has a base of approximately 3.5 million points out that Turtlemint has personality development courses, sales clients, which it acquired online in a short skills, podcasts, etc. We have a dedicated been fairly active on multiple span. It sells around 10,000 policies daily. section for advisors that provides several Health insurance is its fastest-growing social media channels tools that can help them achieve their segment which has grown by 2x in the main goal. The tools can help them last year and by 35% y/y in the first half products of multiple insurance get new leads, access posters, videos, of the current FY. companies through one single mobile curated daily news, product videos, Turtlemint has been empowering application. Secondly, the app helps brochures, etc.” the most important cog in the insurance insurance advisors to expand their ecosystem, i.e., the insurance advisor by business through better service to IN-HOUSE TECH TEAM, TOOLS leveraging the technology. Dhirendra existing clients and by expanding the Turtlemint proactively leverages explains: “Our mobile app Mintpro client base. Dhirendra adds: “We have existing and emerging technologies enables advisors to seamlessly sell the created a groundbreaking multilingual to create efficient and customized right insurance policies to their clients digital solution in the form of the solutions for clients. Dhirendra and also to expand their business. The Mintpro app that empowers advisors explains: “We have a tech team of 150+ pandemic has accelerated the pace of and enables them to grow their business developers and all the development and digital adoption and I am happy to say by selling the right insurance policies, product innovation are done in-house. that we are already ahead of the curve to the right people, and in a seamless We use tools like Jira, Slack, Monday & when it comes to creating seamless manner.” Google Business Solutions for seamless digital solutions.” communication between teams. We 100% of Turtlemint’s business is UPSKILLING ADVISORS ONLINE use Amazon Web Services for hosting, digitally driven. The app has various Turtlemint has a vast pool of point- server space, etc.” facets - firstly, it provides insurance of-sale persons (PoSPs), its insurance People and technology form the very advisors with digital tools that can advisors. Dhirendra explains: “These core of Turtlemint’s business strategy. enable them to sell multiple insurance PoSPs are trained digitally and equipped Dhirendra adds: “An unwavering focus 6 Banking Frontiers December 2021
on harnessing the value of these two queries to reduce turnaround time factors has held us in good stead and and improve consumer happiness. At enabled it to grow at a strong clip. More Turtlemint, these are used to quickly specifically, we have been able to double respond to standard user queries. our revenue run rate.” Dhirendra further states: “We deploy Deep Learning and Optimal Character RPA, DEEP LEARNING, OCR Recognition (OCR) capabilities for Examples of how Turtlemint leverages extracting relevant information from technology are interesting. Dhirendra digital documents. These are used for describes: “We use intelligent automation generating quotes from the previous with technologies like Robotic Process year’s policy copy or RC book. The same Automation (RPA) for repetitive, technology is also used to reduce all the manual and cumbersome tasks like manual efforts to ensure the completeness policy database reconciliation, claims of the data in MIS.” and issuance. We deploy Deep Learning models that leverage and analyze the GENERATING LEADS, GROW data collected through user interactions, Turtlemint has also introduced multi- while ensuring that the privacy of users channel and multi-platform short story Anand Prabhudesai explains is maintained. These models help us formats for content consumption. to predict user churn, identify upsell/ that data science and data Dhirendra says: “A similar approach cross-sell opportunities, enhance the engineering have become is also being followed for consumer conversion of the leads, etc.” critical focus areas for the next education and awareness. In addition Chatbots are used for handling user phase of growth to creating visibility, this also helps in generating leads for advisors.” The Mintpro app has a GROW section which Acquiring Startup To Realize has a wide range of content. Dhirendra Data Engineering Plans further says: “This content is easily shareable amongst all members of the In the post covid- scenario, Turtlemint has set its targets and plans for IT, digital initiatives, Mintpro ecosystem.” for business growth in the foreseeable future. Dhirendra reveals: “Turtlemint strongly believes that the technology will continue to be the main driving force in the insurance ecosystem, orchestrating change and enabling inclusive growth. As we forge ahead, we plan to focus on SOCIAL MEDIA PRESENCE automating processes and optimally leveraging data science, data engineering, Robotic Process Turtlemint has a strong presence on Automation (RPA), and deep learning and OCR capabilities.” social media. It has always believed that a subject like insurance and special Turtlemint recently acquired Pune based startup IOPhysics Systems. IOPhysics has a highly technology in insurance needs to be talented tech team. The startup aims to help data scientists and data engineers derive intelligence from structured or unstructured data in real-time. As part of their highway to a 100 accurately communicated and made Unicorns program, Microsoft recognised IOPhysics as the ‘Most Innovative & High Potential relatable to the target audience so that Startup’ across tier-2 cities in India. As a part of the deal, Turtlemint will also be taking over the its true benefits can be reaped by all IOPhysics IP and product portfolio. Passion Connect, the HR advisory unit incubated by Blume ecosystem stakeholders. Thus, Dhirendra Ventures, one of Turtlemint’s investors, played a crucial role in this acquisition. points out: “We are fairly active on multiple social media channels and Turtlemint co-founder Anand Prabhudesai explains the whole process: “As our company goes into the next phase of growth, data science and data engineering have become critical focus consistently post information related to areas. Passion Connect recognized this need, leveraged its strong network in the startup insurance concepts, educational videos, community and connected us to various startup teams across domains. We loved the IOPhysics industry updates, and current affairs. A team, their IP and product since it allows developers to be cloud-agnostic and pick data platforms similar approach is also being followed that suit the best need for the use case.” for consumer education and awareness. In addition to creating visibility, this also IOPhysics’ founder and CEO Ashish Gawali will join the Turtlemint team as their VP, Data Science and Data Engineering, while the rest of the IOPhysics team will join the tech and data science helps in generating leads for advisors. For verticals at Turtlemint. Its USP is its flexibility to integrate any data with any public cloud data video content, we have Youtube channel platform of choice and data visualization tool – all with an easy-to-use interface. Ashish Gawali, www.youtube.com/c/InsuranceGyan. founder, IOPhysics, says: “When we were introduced to Turtlemint, we realized that both teams For the other educational and industry shared the same passion for improving people’s lives, even in remote pockets of the country. In updates, we have active LinkedIn, Twitter addition, we have immense respect for the intelligence and experience of their leadership team.” and Facebook channels.” mehul@bankingfrontiers.com Banking Frontiers December 2021 7
Brokerages Technology, demography & geography drive growth ICICI Securities, Kotak Securities and HDFC Securities top the list: Profit for bank-brokerages likely to grow 20% T he domestic capital markets uptick in earnings in FY2021 registering continue to remain on an a y/y growth of 40% in total revenues upwards trajectory after a strong and 80% in profit after tax. Samriddhi performance in FY2021. The average points out: “Bank-brokerages have been daily turnover (ADTO) increased to increasingly looking at other non-broking `27.92 trillion in FY2021 from `14.39 sources of income, namely capital market trillion in FY2020, registering an annual lending business, distribution income growth of 94%. As per ICRA, the market and investment banking revenue. Bank- performance has been supported by brokerages have significantly scaled up favourable liquidity in both domestic and the margin funding business over the international markets, optimism related past fiscal, moving in line with the capital to a recovery after the graded reopening market rally, which has resulted in an of the economy, progress on vaccination increase in their borrowing level.” rollout and steady retail investor momentum. Samriddhi Chowdhary, VP FIRST-TIME INVESTORS & Sector Head, Financial Sector Ratings, The retail broking segment has witnessed ICRA, updates: “Transaction volumes a significant disruption in the last few remain strong in the current fiscal, years due to the growing prominence of with the markets clocking an ADTO of Samriddhi Chowdhary feels discount brokerages. The competitively Rs56.36 trillion in H1 FY2022.” priced offerings of discount brokers and that the ability of the bank the no-frill basic accounts and services DISCOUNT BROKERS GAINING brokers to effectively ramp up have resulted in the realignment of the The pool of ICRA-rated bank brokerages their digital initiatives would pricing strategy across the industry. Adds reported a strong performance in FY2021 be critical Samriddhi: “Apart from attracting clients with the estimated average daily turnover from full-service providers, discount (ADTO) increasing 28% y/y to `1.51 trillion from `1.18 trillion in FY2020, led by the healthy growth in the retail Trend in net operating income (NOI) growth of bank brokerages segment. Samriddhi explains: “Despite the changes in the margin requirements, 8,000 50% the performance remained healthy in 7,000 40% Q1 FY2022 with an estimated ADTO 6,000 30% Amount (` Crore) of `1.64 trillion, driven by favourable 5,000 20% retail investor sentiment. However, 4,000 10% the market share of the sample pool of ICRA-rated bank brokerages in terms of 3,000 0% transaction volumes declined in FY2021 2,000 -10% and moderated further in Q1 FY2022 1,000 -20% as they continue to lose share to 0 -30% discount brokers.” FY2017 FY2018 FY2019 FY2020 FY2021 MARGIN FUNDING BUSINESS Net operang income Growth % Bank-brokerages reported a strong 8 Banking Frontiers December 2021
brokerage houses have helped expand Trend in PAT and margin of ICRA sample of bank brokerages the market by bringing on board a large 3,500 50% number of first-time investors. While the market share for bank brokerages in terms 3,000 40% of active clients moderated in FY2021, 2,500 Amount (` Crore) primarily owing to the faster scaling 30% 2,000 up of the discount brokerage houses, they reported a strong performance as 1,500 20% reflected by the healthy operating metrics 1,000 and surge in earnings.” 10% 500 - 0% RAMP UP ONLINE CHANNELS FY2017 FY2018 FY2019 FY2020 FY2021 ICRA expects bank brokerages to continue to build their retail franchise PAT PAT Margin and focus more on technology and digital models for customer acquisition. Samriddhi elaborates: “The cost structure and operational efficiency of the bank PROFIT, BORROWINGS, GEARING TOPPERS IN VARIOUS CRITERIA brokerage companies also improved ICRA expects the net operating income ICRA has picked the top bank- over the past few years with focus on the (NOI) of bank brokerages to grow brokerages in terms of active clients on rationalization of branches, coupled with 20-25% y/y in FY2022, supported National Stock Exchange (NSE). The cautious efforts towards the transition by steady broking income along with sample includes top 5 bank brokerages to a digital business model, thereby an uptick in the margin funding and for analysis of earnings and other improving the operational efficiency distribution businesses; the ramp-up of financial metrics, and top 4 bank- across brokerages.” other capital markets related businesses brokerages for the study of transaction Bank brokerages are also increasingly could further support the earnings volumes and yields. Samriddhi informs: looking at the emerging demographic profile. Samriddhi predicts: “The net “Based on NSE data on active clients, opportunities and new geographical profit for bank brokerages is expected to there are 11 bank-brokerages active in base, which is facilitated through online grow 17-20% during the same period. The domestic capital markets. Our sample channels. Samriddhi feels: “Going borrowings levels of bank brokerages are of bank brokerage companies include forward, the ability of the bank brokers expected to increase in the current fiscal Axis Securities, HDFC Securities, ICICI to effectively ramp up their digital to support their margin funding business. Securities, Kotak Securities and SBI initiatives, attract millennial clients and The gearing levels of bank brokerages are Capital Markets.” expand to a newer geographical base such expected to be in the range of 1.5-2 times She provides necessary details of 3 as tier 2 & 3 cities would be critical.” in FY2022 at an industry level, while toppers of bank-brokerages to substantiate the gearing across entities would vary their positions at the industry level. BETTER BRAND RECALL, TRUST between 1 to 3 times based on the scale She cites comparative data on different Supported by these factors, bank of margin funding operations.” parameters: “As of March 2021, in terms brokerages are expected to register a of active clients (NSE), ICICI Securities healthy growth in client addition as CAGR 19% IN 3 YEARS topped with 1,580,233 accounts, well as transaction volumes, though Bank brokerages attribute to 21% of followed by HDFC Securities (957,085) their share in total active clients would total active clients on NSE as of August and Kotak Securities (743,206). ICICI moderate owing to the rapid expansion of 2021; the share was about 23% as of Securities recorded `958 billion ADTO, the discount broking model. The blended March 2021. Total active clients for bank- followed by Kotak Securities (`361.26 yields are expected to compress going brokerages increased to 4.17 million bn) and HDFC Securities (`91.72 bn forward, though the focus on fee and clients as of March 31, 2021 from 2.56 for 9 months). ICICI Securities earned fund-based income would support the million as of March 31, 2018 registering a NOI of `23.18 billion, followed by Kotak profitability. Samriddhi indicates: “Bank compounded annual growth rate (CAGR) Securities (`19.41 billion) and HDFC brokerages are expected to continue to of 19%. Samriddhi states: “The top 4 Securities (`13.37 billion). As far as PAT enjoy better brand recall, trust, higher bank brokerages together attributed to is concerned, ICICI Securities came first credibility and financial flexibility by nearly 5% of total industry transaction with `10.68 billion, followed by Kotak virtue of being a part of banking groups volumes; the market share would be Securities (`7.93 billion) and HDFC and would, therefore, remain a prominent nearly 9-10% adjusting for proprietary Securities (`7.03 billion).” part of the industry value chain.” trading volumes.” mehul@bankingfrontiers.com Banking Frontiers December 2021 9
Business Technology Alignment Cooperative banks & technological adoption - Keeping pace with the competition In an exclusive interaction, Mannu Singh, Vice-President, Tata Teleservices shares the details about the next gen connecting solutions for cooperative banks in India: Ravi Lalwani: What offerings from Tata timely, and actionable information Tele Business Services have become about customer relations. A single popular among cooperative banks? view between banks and customers at Mannu Singh: M o s t o f t h e any time helps speed up operations. cooperative banks have a core banking The bank gets further advantages setup hosted on their data centre by easily introducing new financial centrally and all branches are required products and manage changes in to connect to the setup. The core banking existing products. The seamless services include mortgages, deposits, merging of back-office data and loan, and credit processing capabilities, self-service operations brings with interfaces to general ledger systems, in a great deal of operational and reporting tools. Cooperative banks efficiency. make these services available to their Greater customer customers across multiple channels like satisfaction: The entire range ATMs, internet banking, mobile banking, of banking products including and branches that are geographically savings, deposit accounts, etc, spread across cities and states. are available from any location Tata Tele Business Services (TTBS) is seamlessly through reliable and a smart connectivity solution that helps secure connectivity solutions bank branches to connect seamlessly. from TTBS. Easy accessibility u Secure MPLS network for banks to and customer operations through prioritize and set up highly efficient multiple channels, including routes for customer traffic, get assured mobile banking and the web, of a high QoS, and benefit from any- become possible. to-any connectivity. Increased customer base: The u Multiple PRI lines facilitate the availability of real-time transactions concurrent transmission of voice as and the entire portfolio of financial well as data traffic over the dedicated products available through the line with the flexibility of using internet and mobile banking enable multiple channels at the same time. reaching out faster to customer and u High-speed internet leased line with helps in increasing the customer base. secured connectivity for business The flexibility to scale up solutions efficiency. helps in easy expansion of services. How have these helped banks to How does Tata Tele Business strengthen their business? Services help banks identify the best TTBS provides advanced bespoke technologies and services to achieve solutions which provide secured their business goals? connectivity, flexibility and are backed Tata Tele Business Services by 24x7 managed support services. works as a progressive digital catalyst These solutions help build operational to enable the banks to adopt the efficiency, greater customer satisfaction best connectivity and collaboration and increased customer base. solutions that significantly boost Operational efficiency: Bank staff their customer experience and can easily and at a quickly access accurate, help them to do big. The most 10 Banking Frontiers December 2021
important challenge in the transition data breaches, the importance of How is Tata Tele Business Services towards ‘digitization’ is the cooperative cyber security cannot be overlooked. helping banks migrate from the capex bank’s preparedness and readiness in TTBS offers endpoint security, email model to the opex model? How does it terms of technology and innovation. security, web security, multi-factor help - especially when the service loads Some of them lack reliable connections authentication, and virtual firewall. fluctuate from minimal to peak? that can ensure secure transactions We have recently introduced the Being fast and flexible is at the and protection of all customer data. industry’s first ‘Customer Experience foundation of all digital and network Given the transaction data’s sensitive Platform (CEP)’. CEP provides first- transformation initiatives today. For nature, there is a need for a seamless hand experience of our solutions and cooperative banks the cost of building and secure communication channel that services to our potential customers, and maintaining their private networks provides the right collaborative tools and shows how they can utilize these can be high and legacy connectivity to make transactions more efficient. for improving their business processes, solutions (like private WANs using They must also make sure that they and then make an informed buying MPLS) can be financially crippling. are equipped with an easy to configure decision. Additionally, our solution This is where TTBS introduced hosted infrastructure that facilitates a experts are available for interactive SDWAN-iFLX which brings intelligence distributed working environment. consultative sessions with our customers and flexibility. Powered by Fortinet, TTBS has an array of solutions to guide them to smoothly integrate the SD-WAN iFLX solution offers to help co-operative banks leverage these solutions within their existing operational simplicity, application-level digitalization: technological framework with minimum prioritization, and visibility, integrated Smart VPN: An MPLS-based virtual disruptions. security, enhanced overall business private network that enables you to share application environment as well as data securely and confidentially over any What would Tata Tele Business Services much-needed resilience at an affordable internet service, from any location. advise banks for improving overall price point. Smart Internet Leased Line: A customer experience? dedicated source of secured internet TTBS helps with evolved connectivity Finally, how can the technology ROI be service with uncontended bandwidth and security solutions for BFSI justified? and symmetric upload & download for operational efficiency and improved As the businesses of customers remote users. customer experience. As the cooperative expand and grow, their banking needs Session Initiation Protocol (SIP): banking sector sets upon its post-covid too are rapidly evolving. Post covid, A signaling protocol to facilitate digital transformation journey, the the quantum of financial transactions interactive communication sessions, key imperatives that it must consider over digital modes has increased including voice, video, and chat over the include: tremendously. With the penetration of internet. u Have robust smart internet the internet and smartphones, customers Hosted PBX: A feature-rich SIP- connectivity which is highly secured. are using more digital payment gateways based telephony solution for outbound u Focus on enhancing digital than using cash for transactions. calls from any location. banking experiences as customers Cooperative Banks need to add more Cyber Security Solutions: With are becoming more comfortable and more products in their kitty and ever-increasing cyber threats and with digital modes of banking and at the same time, increase channels of transactions. accessibility to their customers. u Emphasize more on the adoption of With this, the need for robust Customer View cloud solutions which are capex and networking practices has skyrocketed. “For a seamless banking experience, opex light and provide anywhere, Connectivity across branch locations that we chose to use Tata Tele Business anytime working flexibility to the is seamless, break-free, with minimum Services’ MPLS solution. With banking workforce. or no downtime, congestion-free, and maximum uptime, stable and reliable u Stress more on cybersecurity and with faster speed is quite the necessity VPN connectivity, and 24x7 support data privacy to provide secured and today for operational resilience. At team, uninterrupted and smooth uninterrupted services. the same time, secure connectivity is operations are ensured, increasing To add further, a better managed what most banks today look at. Cyber our productivity and enhancing our toll-free number can help the bank security is like insurance to prevent customer experience and digital bring a paradigm shift in its customer great financial, legal, and reputation onboarding.” experience by enabling customers to loss which may directly impact the loss - Pragnesh J. Mehta Executive Officer IT, Sardar Bhiladwala conveniently reach out to the bank of customer base and business, especially Pardi Peoples (SBPP) Cooperative Bank without any cost - this is also as per RBI’s in the competitive scenario today. recommendation. ravi@glocalinfomrt.com Banking Frontiers December 2021 11
Research Report – Data Maturity Enterprise data strategy boosts profits by 5.97% C loudera has announced the enterprise data strategies for more findings of a global research than a year reported them to be very report, created in association effective (63%), along with higher profit with technology market research firm, growth. Nearly all ITDMs (91%) whose Vanson Bourne. The report examines organizations have an enterprise data the correlation between the maturity strategy in place agree that their current of an organization’s enterprise data strategy is key to their business resiliency. strategy (defined as an organization- SDMs surveyed report an average of wide, integrated, holistic strategy across $384,962 lost annually due to missed all lines of business) and its business opportunities involving data, with the performance. It also explores the impact telecom industry reporting the highest that the ongoing covid-19 pandemic and average annual loss of $6,617,348. its uncertainties have on businesses. The research found that organizations THE FUTURE IS HYBRID DATA DRIVES SUCCESS with mature enterprise data strategies in The report shows an anticipated shift BEYOND PROFITS place for at least 12 months report higher to hybrid cloud in the next 18 months. Utilizing data and analytics can yield profit growth at an average of 5.97%, With both SDMs and ITDMs reporting more benefits than simply increasing according to surveyed senior business that 43% of their workforce will profit margins or gaining a competitive decision makers (SDMs). 96% of SDMs continue working remotely in the next advantage. Most organizations recognize reported that the way data is handled and year, organizations are investing in the vital link between Diversity, Equity, managed has positively impacted their infrastructure to support hybrid working and Inclusion (DEI) initiatives and organizations’ performance, and close environments. A majority (79%) of organizational success. The research to two-thirds (64%) reported stronger ITDMs’ organizations are looking to found that thoughtful data collection levels of resiliency from the presence of a house their data and performance and analytics contribute to the success of mature data strategy. Both SDMs and IT analytics on hybrid architectures. Among DEI initiatives. Nearly all ITDMs (96%) decision-makers (ITDMs) share similar cloud options, multi-cloud emerged and SDMs (95%) believe that data and views, recognizing data as a strategic as a clear favorite, with 44% of ITDMs analytics are important to ensuring business resource, but these groups indicating their preference for multi- successful and effective DEI initiatives, have differing opinions on operational cloud architectures in 18 months’ time. and 95% of both ITDMs and SDMs processes and implementation. With the hybrid data cloud, organizations agree that DEI initiatives contribute to can access and analyze data fast and organizational success. Organizations HINDERANCES TO INNOVATION with ease to make smarter, data-driven with effective enterprise data strategies Visibility remains a key issue for decisions to effectively meet the demands in place are better able to utilize data organizations, with 89% reporting secure, of today’s hyper-competitive business and analytics to benchmark and evaluate centralized governance and compliance climate. employee diversity programs. With over the entire lifecycle as being valuable Accessing and managing data from greater visibility over diversity within when handling and managing data. multiple sources and locations will give organizations, comes better decision- Only 12% of surveyed ITDMs report organizations the control and flexibility making, greater innovation and higher that their organization interacts with of utilizing a hybrid workforce while still engagement in the workplace. all stages of the data lifecycle process – being able to run business as usual. Nearly something immensely helpful in helping all SDMs (92%) believe that making METHODOLOGY organizations achieve an enterprise sense of all data across hybrid, multi- Vanson Bourne conducted the survey data strategy. Without complete control cloud and on-premises architectures is or online and over the phone between July and visibility over every aspect of data, would be valuable. This finding mirrors and September 2021, surveying 3150 organizations will lack key capabilities the sentiments of a majority of ITDMs respondents holding either c-level, senior required to drive innovation. (90%), who report that managing data management or middle management with at least some cloud capacity is a positions from large organizations. EFFECTIVE ENTERPRISE DATA priority for their organization. A similar Respondents were from 15 markets: STRATEGIES REMAIN KEY majority (89%) believe that organizations Australia, China, France, Germany, Organizations see the value in enterprise implementing a hybrid architecture India, Indonesia, Italy, Japan, Singapore, data strategies but struggle to make as part of its data strategy will gain a South Africa, South Korea, Spain, UAE, them effective. Organizations utilizing competitive advantage. UK, and the USA. 12 Banking Frontiers December 2021
Social Transformation Crime & Intoxication drops where PMJDY flourishes S ound financial inclusion policies the share of OFF-US transactions in AePS have a multiplier effect on increased from 4% in September’16 to economic growth, reducing poverty 51% in September’21. Considering these and income inequality, while also being facts, PSBs (that opened around 77% of conducive for financial stability. India the PMJDY accounts) are now net payers has stolen a march in financial inclusion of interchange fee. It is estimated that the with the initiation of PMJDY accounts PSBs could be paying around `6-7 bn per since 2014, enabled by a robust digital annum as interchange fee. infrastructure and also careful recalibration of bank branches and thereby using the BC FINE-TUNE BC MODELS model judiciously for furthering financial The following recommendations have inclusion. The number of bank branches been suggested in the report to make the per 100,000 adults rose to 14.7 in 2020 Dr. Soumya Kanti Ghosh BC model more rigorous and uniform from 13.6 in 2015, which is higher than across all banking entities. Germany, China and South Africa, says branchless banking. However, the Firstly, as AePS works like a Point Dr. Soumya Kanti Ghosh, Group Chief success of financial inclusion depends of Sales (PoS), logically the ‘acquiring Economic Adviser, State Bank of India, in upon Banking Correspondents (BCs), bank’ should pay the interchange fee to a recent research report. who are micro-level entrepreneurs. the ‘issuing bank’. Alternatively, there Interoperability of transactions is could be rationalization in interchange DIGITAL PAYMENT LED FI permitted by RBI at the retail outlets fee as there is no level playing field in Such financial inclusion has also been or sub-agents of BCs ( at the point of infrastructure provided by all banks. enabled by use of digital payments as customer interface), subject to certain With requisite savings, banks can further between 2015 and 2020, mobile and conditions. Herein lies the problem. strengthen/upgrade their BC model and internet banking transactions per 1,000 promote financial inclusion in a more adults have increased to 13,615 in 2019 `7 BN INTERCHANGE FEE holistic manner. from 183 in 2015. The research report from the State Bank of Secondly, RBI should disincentivise In the last 7 years of launch of PMJDY India’s Economic Research Department BCs who are converting the ON US scheme, the total number of accounts further notes that it is sometimes transactions of PSB customers to AePS opened under PMJDY has reached 437 observed that there is no uniformity OFF US transaction in order to earn million, with `1.46 trillion of deposits as among the BCs across banks regarding interchange fee and more commission. on October 20, 2021. Of these accounts, adherence to the above guidelines. PSBs For this, a comprehensive database of nearly 2/3 are operational in rural and mostly follow ‘Branch Led BC Model’, BC agents be prepared through IBA’s BC semi-urban areas. More than 78% of while other banks follow ‘Branch Less/ registry, JanDhan Dharshak App and PMJDY accounts were with PSBs and Corporate BC model’. The BCs of PSBs RBI’s CISBI portal. 18.2% are of RRBs, while non-PSBs’ extend basic banking services, including Additionally, the log-in to the AEPS share is 3%. opening of accounts, from a fixed location applications of the non-branch BC model SBI’s research also shows that states under the oversight of specific bank must be through Aadhaar authentication. with higher PMJDY accounts balances branch. The BCs of other banks operate This will prevent anyone from logging have seen a perceptible decline in crime. through ‘Micro ATM/Kiosk Application and performing unverified transactions. It has also been observed that there is both on Mobile’ and primarily provide fee- This will also result in BCs and their statistically significant and economically based financial services, viz. withdrawals friends and relatives not being able to meaningful drop in consumption of and remittance services, using hand-held game the system by opening accounts intoxicants such as alcohol and tobacco devices. This also adds to the bottom-line with multiple banks and performing products in states where more PMJDY by way of interchange fee from the PSBs round tripping/ withdrawals. accounts are opened. or remittance fee from PSB customers. Some minor tweaks in the existing As a typical example, BCs convert branch less BC model could act as a OUTLETS IN VILLAGES UP AePS ON-US transactions of one set of multiplier for promoting financial The number of ‘Banking Outlets in bank customers, to AePS OFF-US issuer inclusion objectives. This is all the more Villages - BCs’ has risen from 34,174 in transactions and also carry out multiple important as 347 million informal labour March’10 to 1.24 mn in December’20. AePS ON-US and AePS OFF-US force is currently being formalized Such progress shows an impressive transactions on the primary bank through the E-Shram portal. outreach of banking services through application/software. Data indicates that mehul@bankingfrontiers.com Banking Frontiers December 2021 13
Leadership LDP identifies & grooms future leaders at Indian Bank I ndian Bank commemorated its 115th hindrances during the ongoing pandemic. foundation day on August 15, 2021. The All the above listed phase 1 tools have been bank has a staff of 24,821 officers, 12,995 administered online. The phase 2 tools clerks, 2769 sub-staff and 311 full time had been undertaken seamlessly over MS sweepers, totaling to 40,896 staff, as of Q1 Teams, with participants and assessors FY 22. Females comprise 28% of the staff. joining from various locations.” Shanti Lal Jain assumed charge as MD & CEO of Indian Bank on 1st September E-LEARNING PLATFORM 2021. He is supported by 3 executive Indian Bank has unveiled the IB e-note / directors - Shenoy Vishwanath V., Imran e-dak facility, aimed at providing a paperless Amin Siddiqui and Ashwani Kumar. working environment and to improve the turnaround time considerably. Dhanaraj LEADERSHIP: ONLINE TOOLS elaborates: “The bank has customized For existing employees, the Indian Bank Microsoft SharePoint. It also unveiled conducts 4 tests in a year to test the ‘Ind Guru’, an e-learning platform for its knowledge of the employees regarding employees that offers technology enabled latest banking updates and policies. Earlier solutions aimed at capacity building. The the bank didn’t link these tests to annual bank identifies the process automation and performance appraisal report (APAR) score, Dhanaraj T informs that Indian digital workflow amongst the other initiatives however, Dhanaraj T, GM, HRM / CDO, Bank has launched the LDP for as a part of its digital transformation.” (Chief Development Officer), clarifies: “At 800 officers in scale IV present these tests carries weightage in the CHANGE AGENTS APAR score. The bank conducts Leadership the parent competency score. The parent Post covid pandemic, Indian Bank has Development Program (LDP) for officers competency scores are then averaged to focused on ensuring flexibility in work in scale IV to VI and psychometric test is arrive at the tool-wise score.” and the workplace. Given the ongoing part of LDP. In the current FY, our bank has pandemic, WFH (work from home) launched the LDP for 800 officers in scale TECHNICAL SKILLS opportunities are being explored. Dhanaraj IV. The objective of this exercise is to identify The bank finds outcomes of these tests to be clarifies: “A greater emphasis is being placed and groom future leaders of the bank.” satisfactory for over a period of time. The on employee health and well-being. The The LDP consists of 3 phases – phase tools are intended to identify participant’s bank has appointed several change agents 1 entails the administration of online tools behavioural and technical skills and to drive the amalgamated organization’s (psychometric assessments, situation competencies. Dhanaraj underlines: new vision and mission.” judgement test, managerial aptitude and “These tools are robust and provide a Indian Bank has been maintaining its leadership simulation tests). Dhanaraj adds: comprehensive analysis of the participant’s database in SAP (systems, applications, and “The phase 2 entails a set of TBEIs (Targeted behavioural tendencies.” products) through which training data for Behavioral Event Interviews) and GDs (group Indian Bank conducts knowledge tests any period can be fetched. Dhanaraj states: discussions) for the top 250 participants. 4 times in a year. The LDP is conducted on “The details of untrained employees for any Phase 3 consists of panel interviews a yearly basis, and the validity of such test is period can also be obtained from SAP.” conducted by the senior management.” 3 years. Dhanaraj informs: “The content of each of the online tools would be regularly PERSONALIZED PLAN MAPPING COMPETENCIES updated to ensure the tools are in line with The details of certification courses completed The bank gives score for knowledge test market best practices.” by the employees is also maintained in SAP at the end of each training program. For by the bank. As part of LDP, all participants Leadership Development Program, each tool ROBUST TECH, INFRA receive individual development reports, has been mapped to specific competencies. The bank conducts knowledge tests online highlighting their areas of strength and Dhanaraj explains: “Participants are then and they are created in-house. As the LDP development. Dhanaraj emphasizes: “Each scored on a scale of 1 (novice) to 5 (expert). is a large exercise, being administered for participant will create a personalized After competencies of business acumen 800 officers across various locations in development plan, mapped over a 9-month and inspirational leadership are being India, robust technology and infrastructure period. The intent of the personalized measured by the Psychometric Assessment is of paramount importance. Dhanaraj development plan is for participants to Tool, the participants score at the sub updates: “Phase 1 of the LDC has been identify various tips and guidelines.” competency level is averaged, to arrive at conducted online without any technological mehul@bankingfrontiers.com 14 Banking Frontiers December 2021
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