Vol. 17 No. 12 April 2019 `75 Pages 40

NBFC Harmonization Micro enterprises Women in workforce Finway Capital www.bankingfrontiers.com MarketingNext l Instant l Convenient l Customized

Editor’s Blog N. Mohan Mobile : 9322895820 Email : [email protected]

April 2019 - Vol. 17 No. 12

Group Publisher : Babu Nair Group Editor : Manoj Agrawal India moving towards Editor : N. Mohan open banking Editorial Mehul Dani, Ravi Lalwani, V. Raghuraman here is lot of talk these days about open banking. It has been there in the US and Europe and India cannot afford to be not taking notice. Under the Open Banking Standard, which is in fact Research Editors Ta UK initiative by the Open Banking Working Group (OBWG), banks can share users’ data in a Prof Venugopal Iyengar, V. Babu, secure manner through open APIs with third party apps, such as fintech companies. So, open banking Ratnakar Deole, W.A. Wijewardena, envisages sharing of data so that customers, be it individuals or businesses, can more effectively Sanchit Gogia, K.C. Shashidhar, manage their finances. Open APIs would also allow third party developers to create helpful services Dr. L.S. Subramanian, Ajay Kumar and tools that customers can utilize. An important step in ushering in open Advisor-Alliances banking was the legislation adopted Ateeq Siddique by EU and the UK in January 2018. The legislation emphasizes that banks must Marketing share transaction and customer data Preshit Deshmukh, Kailash Purohit with authorized third party providers. And Events & Operations banks can do this through APIs. Gautam Magare, Shirish Joshi, Currently, enterprises, especially the Stalin Saldhana, Pramod Jadhav, small and medium ones, though using Amit Gupta, Shweta Kadam, software for managing their finances, cannot incorporate transaction data in Ashish Verma, Wilhelm Singh, their books automatically and in real time. With APIs from their banking service providers, it would be Natasha Vaz, Sneha Agrawal possible for them to access all bank data in real time, ultimately giving them more accurate and up Design to date information on finances. They will be able to compare and save on their accounts and have Somnath Roy Choudhury access to more personalized resources for making banking decisions. It may take years for this system to mature and consolidate. Published By As far as the banking sector in India is concerned, while there are several developments - the Glocal Strategies & Services changing customer patterns, advent of digital tools, increasing use of technologies like distributed D-312, Twin Arcade, Military Road, Marol, ledger technology - open banking is still far away. But banks are keen to experiment and finetune Andheri (E), 400059, India. the system. For a bank, data confidentiality and security are supreme in order to have the trust of the Tel: +91-22-29250166 / 29255569 customers. Bankers are concerned about the effectiveness of the Indian data protection rules. Fax: +91-22-29207563 Recently, private bank DCB Bank has launched its open banking platform to create a collaborative ecosystem with enterprises, fintechs and app developers. was the first to launch APIs allowing integration with ERP systems of corporate clients. RBL Bank has an API banking services platform for use by enterprises. has an API platform for lending and payment products. A Printed & Published by Babu Nair on couple of public sector banks have also initiated open banking processes. behalf of Glocal Strategies & Services and A significant related development in this journey towards open has been the Printed at Indigo Presss (India) Pvt Ltd., neo-banking platform Open, a first in India. The idea is to facilitate SMEs to adopt digital with Open Plot No. 1C/716, Off Dadoji Konddeo Cross becoming an interface. It began its operations in partnership with ICICI Bank and now 11 banks are its Road, Between Sussex and Retiwala Indl. partners. With bankers now discussing to open their APIs for fintech startups to build solutions around Estate, Byculla (E), Mumbai 400027. it, Open hopes there are opportunities for it. Open banking has definitely paved the way for a collaborative ecosystem between banks, Editor: N. Mohan (Responsible for selection fintechs and third-party providers to offer varied and personalized financial services and a better of news under PRB Act) grip on decision making depending on funds available at a given point of time. As open banking has disrupted the banking ecosystem at the global level, it is just a matter of time that the Indian banking system migrates to this platform fully.

Banking Frontiers April 2019 3 HOUSING CONTENTS April 2019

Articles Banks/Institutions covered Topics covered News Regulator...... 5 Fino ...... 10 Global fintechs...... 8 Project Pipeline...... 6 ...... 10 BFSI Marketing...... 10 Fintechs in France...... 8 Indiabulls Financial Services...... 10 NBFC Categorization...... 15 BFSI Marketing...... 10 Capril Global Capital...... 10 Micro enterprises...... 16 NBFC Harmonization...... 15 Motilal Oswal...... 10 Women in workforce...... 18 Helping micro segment...... 16 IndiaFirst Life Insurance...... 10 Securities Trading...... 26 Women empowerment...... 18 Edelweiss Financial Services...... 10 Lending by NBFC...... 28 Conference - CEO Forum...... 20 ART Housing Finance...... 10 Financial Inclusion...... 30 Conference - Phygital...... 22 RBL Bank...... 16 PMJDY...... 32 Conference - Govt Role...... 24 ...... 18 Discount Broking...... 36 Conference - Workforce...... 25 Kotak Securities...... 26 Malware in Office...... 36 Kotak Securities...... 26 HDFC Securities...... 27 Reading Habits...... 37 HDFC Securities...... 27 Finway Capital...... 28 Finway Capital...... 28 Punjab & Sind Bank...... 30 Financial Inclusion...... 30 Tamilnad Mercantile Bank...... 30 PMJDY...... 32 Ahmedabad DCCB...... 30 Research Report - 1...... 34 Maharashtra Rural Livelihoods Mission... 32 Research Report - 2...... 36 Reading Habits...... 37 People Track...... 39 SUBSCRIBE NOW 24 Issues 36 Issues Banking Frontiers ` 1,500 ` 2,000

l Please allow one month lead-time for delivery of first copy I wish to subscribe to: (Please tick the appropriate box) l Magazine copies are delivered by post. To 24 Issues 36 Issues get copy by courier instead of post, please add `600 for 2 years and `900 for 3 years Name Details for RTGS or NEFT payment: Designation Company : Glocal Infomart Pvt Ltd Company Address Account No. : 450301010036295 City State Bank Name : Union Country Pin/Zip Branch Name : Bhavani Nagar, Marol Maroshi Phone Mobile Branch Place : Andheri East Fax Email Branch City : Mumbai Please find enclosed cheque No. for Rupees Branch Code : 545031 Dated Drawn on (Bank) IFSC Code : UBIN0545031 in favour of Glocal Infomart Pvt Ltd (Cheque should be payable in Mumbai, India) Send your cheque to: Glocal Infomart Pvt Ltd 4D - 312, Banking Twin FrontiersArcade, Military February Road, 2019 Marol, Andheri (E), Mumbai 400059, India Tel: +91-22-2925 2411 l 2925 0166 l 2925 5569 Fax: +91-22-2920 7563 Email: [email protected] Website: www.bankingfrontiers.com N E W S Regulator China to bring fintechs under regulation MAS guidelines The People’s Bank of China is developing rules to regulate fintechs on virtual banks in China. The feels the Malaysia’s central bank Negara Malaysia country has become an emerging is expected to come out with guidelines fintech market and has seen a surge for virtual banking licenses. The regulator in the use of technology by banks feels the introduction of such a licensing and financial services institutions regime will likely bring about a wave of in order to attract customers who neo-banks from both incumbents and have not been covered by banking disruptors alike. The concept of neo-banks institutions so far. The regulator is was first popularized by fintech firms like of the view that while technology Moven, Monzo and Starling. The idea is to and its use are fine, but the offerings have entities offering something like mobile by financial services companies are banking on steroids - designed to be mobile cause for concern. Concerns have also been expressed by institutions like Phoenix first and typically without any branch. Finance, whose president of Vince Zhang has said that many fintech firms in the Hong Kong has recently approved virtual country do not have the controls to make them safe investments for both consumers banking licenses to certain entities. and the nation’s economy. The central bank is also intending to utilize the technology to enhance the flow of credit and reduce financing costs for businesses, as well as improve the ability to prevent risks. Hong Kong issues digital banking licenses MAS plans to handle Hong Kong issued its first batch of digital banking licenses. The licensees include traditional financial institutions and Chinese companies. The Hong Kong Monetary technology risk Authority issued licenses to 3 companies - Livi VB, a joint venture between Bank of China (Hong Kong), JD Digits and Jardines; SC Digital Solutions, which includes , HKT, PCCW and Ctrip Financial; and ZhongAn Virtual Finance, which includes ZhongAn Online and Sinolink. These companies intend to begin operating within 9 months. Notably, Chinese technology companies Tencent and Alibaba’s Ant Financial were left out of the first round of approvals. HKMA, which called the licenses a ‘milestone’ for the city, said 5 more applications are still under consideration and further announcements would come sooner rather than later. There are high hopes for digital banks in Hong Kong, where traditional incumbents dominate the market, but customer satisfaction is among the lowest for a developed economy.

Kenya regulator wants banks to avoid punitive measures The Monetary Authority of Singapore The Central Bank of Kenya is discussing with local banks to ensure that they do not proposes to strengthen its capability to handle introduce punitive measures while recovering money lost because of interest rates technology risk by putting in place measures capping. The central bank’s governor Patrick Njoroge said that central bank will draft a that would require financial institutions to monetary policy to make the banking sector more customer friendly. He felt the caps have develop operational resilience. The plan is in a sense destroyed part of the country’s economy. The country’s High Court had declared to expand its Technology Risk Management the Banking (Amendment) Act 2016, which capped interest rates, unconstitutional. (TRM) Guidelines issued in 2013 and the Njoroge feels the effects of the capping law have not only affected the monetary policy’s Business Continuity Management (BCM) effectiveness but also credit flow to MSMEs. He says there is need to find a way to expand Guidelines issued in 2003. MAS said the credit access to MSMEs and provide them with other necessities to grow. 2 guidelines continue to emphasize the importance of risk culture, and the roles of Pakistan to use cryptocurrency by 2025 board of directors and senior management State Bank of Pakistan is evolving a strategy to introduce the use of cryptocurrency in in technology risk and business continuity the country by the year 2025. The deputy governor of the central bank Jameel Ahmad management. The regulator also wants to said the bank is working on incorporating crypto assets to promote financial inclusion consider the rapidly changing physical and and reduce inefficiency and corruption. The regulator is also planning to make banking cyber threat landscape. It proposes to expand in the country fully digitized and technology equipped by 2030. Meanwhile, the central the TRM Guidelines to include guidance on bank has released new rules for all digital asset companies which are under the umbrella effective cyber surveillance, secure software of ‘Electronic Money Institutions’ to ensure that they operate under licensing regime development, adversarial attack simulation so that they offer convenient, cost effective, interoperable and Secure digital payment as well as the management of cyber risks products and services to the end users. posed by the Internet of Things (IoT).

Banking Frontiers April 2019 5 Project Pipeline BoB wants knowledge partner for WeLead II OICL wants bilingual is in the process of selecting a knowledge partner CIS solution to help it design and implement a Oriental Insurance Co is looking for a comprehensive leadership training bilingual solution for its core insurance program it is creating - ‘WeLead II’, system. The solution is intended to convert which is a key tool for the bank’s all the documents/reports to be downloaded leadership development journey through Core Insurance Application through multiple learning and (INLIAS) to the target language, that is, development interventions. The Hindi. Apart from the INLIAS application, program envisages covering some the company as has deployed various 4900 officers/executives of the bank centralized applications like its web portal, for a period of 9 to 12 months varying on the level program. The bank intends to SAP-based Investment Management identify and engage an organization that has credibility and understanding of the System HRMS (PeopleSoft), and others. issues relating to leadership development to be its knowledge partner in this program. The company wants the system to be capable The bank had introduced ‘WeLead’ as a comprehensive leadership program in 2017 of converting from English to Hindi all with the objective of building this pipeline of leaders. WeLead II is a continuation of the reports/ documents to be downloaded this program for new batch of officers/executives and this program will run across 4 through the INLIAS application. Also the levels of officers and executive of the bank. company wants the proposed solution to be able to be deactivated so that the core LIC to introduce 2FA authentication application and other applications should The Life Insurance Corporation is proposing to introduce end to end 2-factor be usable without it and that it can be authentication solution to streamline its security system. It has sought proposals from activated as per individual user’s choice to service providers who would have to undertake project planning and management, carry out application translation. system study and preparation of functional requirement study document, system requirement study document, data flow diagrams, data model, review and analysis of the existing system design, architecture, process flow for the proposed solution, plans designing the security and information architecture as well as maintaining a web- based user interface for inventory of the fingerprint scanners (including existing RedTeam exercise inventory data after migration) along with the details of user allotment, endpoints connected, etc. LIC will also procure around 60,000 fingerprint scanner devices for scanning and matching of fingerprints as part of the project in a phased manner. SBI plans customization of its SAP HRMS The is planning to undertake an exercise to customize its SAP HRMS application on time and material basis. The bank has sought proposals from SAP development and implementation vendors for SAP-ERP (currently ECC 6.0- EHP6), SAP-BOBJ and Net Weaver Enterprise Portal (version7.3 or later) & FIORI for configuring / customizing services meeting its specific requirements. The bank is aiming to centralize and automate its HR processes, as part of its HRMS project Indian Bank proposes to conduct a initiated in 2006. The project is currently managed by a vendor for configuration / RedTeam exercise to assess its defensive, customization and many services having been completed and rolled out pan-India detection and response capabilities in for its 550,000 employees/pensioners. At present, the bank has implemented the event of a cyber security incident and HCM module of SAP, but it wants to cover all modules of SAP and all types/categories identify the vulnerabilities and subsequent of employees and pensioners. The service provider will be responsible for 4 system business risk because of such an incident. landscape comprising development, quality, pre-production and production and for The bank wants the RedTeam exercise integrating MS SharePoint or Lotus Domino 8.0 or Microsoft Office 365 acquired by to cover physical security, assessment of the bank for display, updation and workflow purposes. the security operations center, incident response maturity, user awareness against Central Bank to have automated audit processes social engineering and network security is proposing to automate its risk-based audit processes and is testing. The exercise is to reveal real world looking for an web-based audit automation system with modules required in an audit opportunities for malicious insiders or bad process. The bank wants a software system that has provision for maker & checker. characters to be able to compromise all The internal auditors/ external auditors are also required to carry out risk based audit aspects of the organization in such a way it and verify various types of risks, - business risks and control risks - to comply with allows for unauthorized access to sensitive statutory/ regulatory guidelines. information.

6 Banking Frontiers April 2019 Convergence The Payment Integrity Payoff The need for banks to look at reconciliation amidst ever increasing transaction volumes:

cross the internal systems of banks and payment providers, the convergence of payment channels is helping streamline Aoperations and provide economies of scale. Retail payments, such as card transactions, and enterprise payments – from interbank settlements to faster payment schemes – are coming together to share more of the same, centralized infrastructure. But validating these payment flows is another story. In a busy payments ecosystem, the many checks and balances that are needed to be made are often managed separately - the operational controls often being fragmented as well as incomplete. And that’s bad news for the integrity of payment processes – whether they relate to everyday card transactions or substantial interbank settlements and faster payment schemes. And with exceptions more likely than ever to happen, the very integrity of payments is under threat as a result. Mistakes, missteps and fraud can cost dearly and result in be fixed fast. Any delays to resolution will expose the institution penalties, complaints or even missed funding opportunities. to risk or potential compensation claims. So, a centralized While retail and enterprise payment channels increasingly solution should automate either the remediation or escalation of converge within banks and payment providers, many firms still exceptions as part of its workflow. fall short of a centralized approach to validating their different l Monitor liquidity intraday across all payment schemes to meet payment channels. settlement and regulatory obligations: To make sure settlement POS transactions, for example, move through device software, and regulatory obligations are met, the institution needs a clear, switching networks, payment networks and internal systems, while dynamic view of liquidity levels that shows how payment flows enterprise payments are pushed from treasury and front-office systems affect account balances. A built-in liquidity monitoring solution through payment hubs and interbank networks such as SWIFT. should deliver intraday visibility across all payment schemes. But no matter what the payment flow, the bank should ensure – l Implement an auditable workflow that allows reaction to at each stop en route – that no information is lost, muddled, added surpluses or shortages with intelligent funding: With confidence or amended. in liquidity positions, the institution should be able to react quickly In other words, there are now a lot more checks and balances to to surpluses or shortages with auditable workflow. For optimal be made, more quickly, across retail and enterprise payments – and funding, that could mean holding some outbound payments until at varying frequencies; some in real time, others intraday or at end funds arrive and expediting others to reduce positive balances. of day. And traditionally, payment providers have carried out these l Collect and present the right data for compliance and checks as disparate processes, increasing costs, complexity and risk. business intelligence to deliver comprehensive reporting: A single, powerful automated platform for payment matching, Automatically collecting and presenting all data required for liquidity monitoring and exception management will facilitate just compliance with liquidity management guidelines, the integrated that – streamlining operations and providing new economies of scale. solution should incorporate business intelligence capabilities for It will also ensure integrity throughout the payment lifecycle, with comprehensive management reporting and analytics. scheme-specific, industry-standard templates, an integrated solution Through automation and AI, FIS’ IntelliMatch solution of this kind will help the institution meet settlement obligations and provides an answer. FIS’ IntelliMatch will give a robust platform intraday funding requirements. It will also enable resolve errors needed to support more accurate funding decisions, improved rapidly 24/7, before they affect other processes or customers. reporting, and better customer service. The integrated solutions Follow these five practical steps to developing a strong, centralized for position and limit monitoring, intraday data integrity checks validation and control framework for all payment channels: and payment investigation and exception management provide a l Detect errors and fraud with a powerful matching engine: solid foundation for operational control, laying the groundwork A powerful, sophisticated matching mechanism is critical for for the bank’s future competitive advantage. IntelliMatch helps instantly identifying where payment information has been altered businesses grow through rapid on-boarding of new reconciliation, or differs from system to system. For ultimate integrity, accurate consolidation of infrastructure and processes to reduce operational data must flow consistently between systems throughout the risk and minimize costs. payment life cycle. For more details on how to keep up with l Automate the remediation and escalation of exceptions for convergence and accelerate time to value visit rapid resolution: Once a discrepancy has been spotted, it must https://empower1.fisglobal.com/make-payment-integrity-pay-off.html

Banking Frontiers April 2019 7 Country Report France sees 300 fintechs every year France has a unique ecosystem for fintechs - government support, regulatory ease and easy funding opportunities:

rance, known for its creativity in arts, literature, culinary science, popular Fmovements and building iconic monuments, has never lagged behind in things relating to technology. True to that spirit, the country has several unique fintech startups - in fact it has seen the emergence of the highest number of startups annually, the number being around 300 and almost all of these bringing out a product or a solution or a system for banking related technologies. The fintechs also receive ample assistance from government and private enterprises. There are indeed some constraints that impact the healthy growth of these fintechs, A view of participants at the Paris Fintech Forum 2019 in Paris the notable among these being some of the tax policies of the government. A PLATFORM FOR DISCUSSION provider Ledger (valued at €75 million), The French regulator, the Autorité crowdlending platform Younited Credit AMPLE FUNDING FROM GOVT des Marchés Financiers, or AMF, and (€40 million) and mobile payment and card The first significant move on the part of the Banque of France have jointly set up the app Lydia (€13 million). French government to promote fintechs FinTech Forum, which is a framework for came in 2013 when it set up French Tech consultation and dialogue with the fintech SUPPORT FROM BANKS and provided €200 million in funding for industry. Bringing together fintechs, Soon, after initial misgivings, large banks accelerators and €15 million for any startup public authorities and supervisors, the and insurance companies understood the with plans to franchise. The government forum is acting as a venue for monitoring value of innovation and incorporating some said the move was ‘to capitalize on initiatives developments, engaging in dialogue of the products and tools developed by the developed by French Tech members and and making proposals. The goal is to fintechs into banking systems. Investments build on existing ideas to create a snowball more effectively identify the challenges from banks into fintechs rose and a study effect’. The initiative received support associated with the development of fintechs by KPMG in 2017 revealed that 82% of from major French technology firms and in terms of opportunities and potential traditional financial institutions planned to financial institutions. The move led to the risks. The forum may be consulted on strengthen their partnerships with fintech creation of accelerators and tech hubs in proposed changes to domestic or European firms over the next 5 years. Banks even various cities of the country and funding regulations and on amendments to AMF supported the growth and diversification from major investment houses. or Autorité de Contrôle Prudentiel et de of the fintechs and some of the bankers France’s first fintech incubator was Résolution, or ACPR, policies. have even said publicly that the efforts is set up by Truffle Capital, an early stage In addition, the French government, to improve the chances of these startups to venture capital firm that focused on digital in partnership with several players in the become global leaders. innovation. Other efforts included the private sector, created Swave, a platform The latest support for the fintechs has establishment of a campus for fintechs on dedicated to the business incubation of the come from President Emmanuel Macron, the ruins of Halle Freyssinet by billionaire fintech industry. who announced a government investment entrepreneur Xavier Niel, who is the The French Tech Initiative brought in of €11.2 billion in startups in 2018. The founder of telecom company Iliad, and the the desired results. Some 40 accelerators government is also inviting several fintech setting up of France Fintech by Societe were set up in Paris alone by 2015 and there firms in the UK to set up ventures in Generale banker Alain Clot with the aim of were some 5000 startups which wanted France post Brexit and it is quoting the supporting finance-orientated startups to to demonstrate their prowess. Some of benefits, including the convenience that develop innovative problem-solving models. the early names include hardware wallet is offered by Europlace, an organization

8 Banking Frontiers April 2019 From banking to insurance mechanism for ICOs and cryptocurrency. to crowdfunding It has also announced that it will promote he French fintech scene is indicative use of blockchain in financial transactions Tof the French passion for innovation, and the country’s minister of Economy creativity and entrepreneurship. Here and Finance Bruno Le Maire, had publicly are some of the top fintechs: announced that the country will not miss Margo Bank is a fintech startup that the blockchain revolution. has set out to create the next-generation Regulator AMF has played the role of commercial bank for European SMEs. a game-changer, when it set up an entire It offers personalized attention and Autorité des Marchés Financiers in Paris department dedicated solely to laying the close follow-up with bankers, rich tasked with promoting and developing the regulatory foundations that would enable digital services & availability on multiple Paris financial marketplace as well as labor development of fintech. It also took up steps platforms. reforms the government has undertaken, to harness the expertise of other like-minded Alan is a health insurance startup tax incentives and availability of capital. jurisdictions, with the establishment of joint offering complimentary insurance for agreements with organizations overseas. It, medical expenses, targeted towards SUB-CATEGORIES TOO ACTIVE in association with ACPR, has launched a companies & individuals, who can sign When discussing fintechs in France, consultation body which gathers fintech up and be approved for health insurance coverage in less than 5 minutes online. it is relevant to discuss about the sub- heads and experts to gain a clearer picture IPaidThat simplifies and automates categories as well. Insurtech is one area of the regulatory and supervisory challenges the accounting of startups and SMEs. that is very active in the country. One of the linked to financial innovation. Its software automatically searches for accelerators, Startup Palace, had launched It is a positive development that steps invoices in mailboxes and links them to its French Assurtech program to support have been taken for creating a regulatory banking operations in real time through insurers’ PoCs with selected insurtechs. regime that is sensitive and responsive to machine learning, Blockchain, and AI Startups in this space are now active in the changing nature of fintechs and regtech. Qonto offers modern banking developing products relating to IoT/ solution tailored for small businesses distribution, Parametrics Insurance and NO REGULATORY SANDBOX STILL and entrepreneurs. Its features include AI for claims management. There are also Unlike the Financial Conduct Authority of an international bank account number, a number of startups involved in developing UK, which has implemented a ‘regulatory physical and virtual cards, synchronized tools for cyber insurance. sandbox’ for experimental phases with transactions with different accounting Investment and Financing Services lighter regulation for fintech businesses, software solutions, and more. category too is active as there are some 66 fintechs in France do not benefit from similar Mooncard has developed a new startups, which are involved in developing preferential treatment. The French regulator’s generation of payment cards for innovative products like consumer credit approach is a proportionality approach, businesses. The solution manages solutions for online brokers. In the banking which consists of personalized assistance corporate expenses and expense claims and related services segment, there are to fintechs by providing comprehensive through a simple Mastercard personal players like Qonto (B2B neobank), support concerning regulatory requirements, that automates the entire Lydia (B2C payment app turning into a although the French government is holding expense management process. kind of metabank), Bankin, Linxo and consultations to consider whether to enact Younited Credit is one of the Budget Insight. less stringent rules specifically applicable to biggest fintech startups, operating Similarly, startups are expected to come fintechs companies. peer-to-peer lending platform. The company allows institutional investors up with innovative solutions in the regtech So, fintechs in France build, buy and and private individuals to lend money segment too what with compliance costs in team up to grow. The country has seen to borrowers directly via a secured the light of GDPR/AML/MIFID2/PSD2/ the establishment of many new fintechs bond marketplace. pushing regulated institutions to implement each year and newer among them are Lendix is an online marketplace for tools to facilitate compliance checks and focused on personalization to create new business loans, allowing investors to reporting. KYC and ID management are methodologies to deliver services more advance money directly to SMEs. the other areas where startups are expected efficiently and holistically. They also buy Ulule is a leading crowdfunding to play a crucial role. others in order to acquire new activities or site and it has funded thousands of to improve/develop theirs. France no doubt projects in many fields, from music POSITIVE REGULATIONS is convinced of the potential of the fintechs creation to audiovisual. Another positive step it that the government to make the world’s financial system more Kisskissbankbank provides a has introduced a clear and ambitious set of efficient, transparent, better governed and crowdfunding platform for athletes, regulations providing legal certainty to the more responsive to change. humanists, and creatives to raise funds startups. It has already created a governing [email protected] for their projects.”

Banking Frontiers April 2019 9 Cover Story

MarketingNext l Instant l Convenient l Customized

Marketing heads from leading BFSI companies of India share how marketing is changing from a single focus to multiple foci:

n the recent BrandZ Study by Millward Brown, 5 of the top 10 rurban landscape of the country. Organisations catering to multiple brands by valuation in India were from the BFSI sector. This customer segments and connecting with rural and urban consumers Iclearly shows that BFSI sector today occupies the centre stage. together is one trend which is clearly visible. The BFSI industry of India is going through a transformation Take the case of Fincare . It uses direct era, new products and customized services have contributed to approach to target the local customers. The bank engages with the the revolution in the industry. The industry has faced challenges local community within 30 days of the launch of the marketing in terms of under-penetration and complexity of understanding. campaign, which is done to create brand recall and familiarise Finance companies are migrating from outmoded business models consumers with its products and services. Pankaj Gulati, Chief to business designs that are better able to satisfy customers’ priorities. People Officer at the bank, shares the details of the localised theme With increasing digitization, the BFSI players are undergoing a big events: “Our events are localised specific to the market where we change as can be seen with the rise of fintechs and the migration are launched. Different themes are adopted such as senior citizen of customers from PSU banks to private banks. These factors have related activities and associating with local sports. Similarly, a few contributed in the transformation of the marketing strategies social or community related work, like a CSR event. The idea is to adopted by the financial organisations. involve customers to generate leads.” India First Life has changed the positioning of the brand. The Brand centric to customer engagement company now focus on providing simple, smarter and faster products In the BFSI sector, one can clearly see a shift from just selling a to its customers. Rushabh Gandhi, Deputy CEO, IndiaFirst Life product or brand positioning to trust building. The trust factor plays speaks about the brand positioning strategy: “We are the first digital an important role, particularly in targeting the rural customers of first insurance company of India, we follow paperless process, our India, as the rural customer are not interested in how big as a brand sales team and agents uses tablet for selling the insurance products. you are or what is the most intelligent thing about your brand or how Our focus on customer is significant, customised and personalised.” you are perceived by the rating agencies. Finance companies are seen focusing on consumer marketing, It is heartening to see how businesses are migrating from being segmentation and customisation for brand building and creating urban focused to rurban focused. In the past, financial companies trust among their customers. Brands with a relevant and had businesses that were either rural or urban. Marketing as a differentiated value proposition, that simplify the role and benefit trend existed primarily in the urban space. But with the advent of of various products will be the ones that not only going to survive organizations like small finance banks, there is a definitive rise in the but thrive in the coming years.

10 Banking Frontiers April 2019 Meher Sarid Peeush Jain Rajneesh Chawla Rajesh Sharma Rakesh Wadhwa Group President Corporate Affairs - HR, Head, Retail Banking, at Lakshmi Vilas Bank Former Group Head Marketing, Indiabulls Managing Director CMO & EVP, Strategy & Retail Assurance, Brand & Market Capri Global Capital Limited FGILI

Shailesh Pandey Ramnik Chhabra Rushabh Gandhi Shabnam Panjwani Suneel Yadav EVP and head - Strategy & Marketing at Director Marketing, CEO, IndiaFirst Life Head - Marketing Communications, VP, Chief Marketing & Experience Officer, Fino Payments Bank MOFSL Edelweiss Financial Services ART Housing Finance

Rise of online marketing ground activities and partnerships.” Rajneesh Chawla, former group BFSI companies uses mix of the traditional and digital channels head, Marketing, at Indiabulls Financial Services, explains the digital to target their customers. The companies use the channels as per initiatives of the company: “The company is focused on the digital the needs and requirement of their target audience and marketing channels, as digital is more contextual to the customers. It focuses more campaigns. They use digital channels like social media, email, and more on personalized campaigns to target customers. Digital will Google search to market their products, traditional channels like help in micro-segmenting the customers in terms of communications TV and cinema for long term brand building, and newspapers for and marketing campaigns. It adopts a 360-degree marketing approach immediate awareness creation. to target the customers, using both ATL and BTL channels. The strategy Motilal Oswal has a marketing budget of more than `300 depends on geographic locations of the target customers.” million per year, and it is spent equally between offline and online In the last few years, there has been rise in the digital marketing media channels. While it spent around 24% of its marketing budget budget among the BFSI companies, as the digital content is getting on digital in FY14-15, this increased to 50% in FY18-19. popular among the millennial customers. Content marketing and video Fincare Small Finance Bank uses digital marketing to create content development are the next big things. brand awareness to attract talent into the organization. The bank is now using digital platforms as a lead generation channel. It has Traditional marketing still dominant a budget of about `20 million for digital marketing for FY18-19. Traditional marketing channels like print, TV and OOH are still Pankaj Gulati said: “Our overall marketing budget is approximately popular among the financial marketers. Fino Payments Bank uses `150 million, with an increase or decrease of 20%, depending on TVC campaigns to target its customers. The bank launched its first the campaing requirement. The budget is spread across various TVC campaign in September 2017 and another in March 2018. It ATL and BTL marketing channels. Presently, the ratio between uses print advertisement campaigns in the key states of the country offline and online marketing is 90:10, it will increase to 70:30 in and branded content activity across Maharashtra, Bihar, UP and the coming years.” MP. Shailesh Pandey, EVP and head - Strategy & Marketing at Fino Over the last 3 years, Future Generali Life Insurance has Payments Bank, speaks about the traditional marketing channels: increased its digital marketing budget by 50%. Rakesh Wadhwa, “Our tagline is ‘kadar mahenat ki’ and we use traditional media CMO, EVP - Strategy & Retail Assurance at the insurer says: “We channels like print advertisements, hoardings, posters, cinema effectively do content marketing to reach our customers and video branding, etc, as part of our marketing campaigns. In the southern content is the next big thing for our marketing campaigns.” region, as the literacy rates are higher, newspapers and magazines Capri Global Capital’s marketing budget comprises 95% offline play an important role. In western and northern region, audio-visual and 5% online. Rajesh Sharma, managing director, said: “There is medium is more effective.” no fixed marketing budget as we are in growth phase. With heavy IndiaFirst Life Insurance had launched ‘Because Life Is Full feet on street model, the focus is on ensuring regional reach with of Certainties, Life Insurance Must Hai’ and Independence Day

Banking Frontiers April 2019 11 Cover Story

campaign on social media for creating high engagement, involvement Various Flavors of Analytics and for creating brand awareness. Rushabh Gandhi reveals details FSI companies have rich about the advertising ratio: “We use 360-degree marketing channels Bwealth of data at their like outdoor, print media, radio and other social media channels. fingertips that can provide We focus on using omni-channels to reach our customers. We have insights to evolve marketing marketing ratio of 50:30:10:10 between OOH, digital, print and strategy, attract and retain radio channels. We display advertisements outside the branches of customers, and boost customer Bank of Baroda and to target customers of these banks satisfaction. The key, however, for life insurance products; we receive 80% of our business from lies in how marketers gather, these two banks.” analyze, and leverage that data Rajesh Sharma gives details about the traditional partnership to achieve desired outcomes. model adopted by Capri Global Capital: “We participate in multiple Analytics in marketing enables finance marketers to gain property expos at the local level, in locations where we have branch actionable insights that drive results. Analytics in marketing presence. Also, we have tie-ups with developers to have a presence helps BFSI companies in ROI measurement, customers lifestyle, at their project sites where we offer home loans to the property identifying which marketing campaign worked and why, monitor buyers. In addition, we also do offline marketing activities such as trends for a given period and over time and forecasting results. installing canopies and distributing pamphlets in local markets. Fincare Small Finance Bank uses SEM rush tool for website Some other lead generation techniques are through our team’s analysis, keyword backlinks and Google Analytics to analyze network or chartered accountants and tax consultants who pass website traffic reports, source of traffic and average time spent. the customer leads to us.” The bank also uses Google Search Console to identify popular Traditional marketing channels like print, TV, OOH and keywords, webpage submission to improve traffic on website radio still have dominant role in targeting the BFSI customers and ranking on search engine. particularly in the tier 2, 3 & 4 cities and rural areas of the country. Motilal Oswal has gone one step ahead and has deployed BFSI companies need to use segment-wise traditional marketing an AI backed solution for superior experience-based services channels to target the potential customers, as this will save the cost for engaging with prospects and clients. The company is now and message will reach to the right customer. able to manage various touch points that a prospect or a client uses to get in touch with us and provide real time updates and variety of Digital campaigns notifications to the user directly on the app. The internet has gripped everyone’s imagination, and it has changed Ramnik Chhabra shows how analytics helps with content and the landscape for the BFSI industry in India. With digital literacy timing: “The best part about our capability is that it is completely on the rise, the last few years have witnessed significant mobile customized as per the behavior, and different clients will see data and internet penetration. Further, there has been a rise in adoption pertaining to their behavior only. To illustrate, say a client added of new age technologies, plethora of digital avenues opening up a stock to his/her watch list. We will be able to send a research and increasing internet enabled channels. All these factors have call to that client the moment it is published at our end; and only contributed to the rise of digital marketing. that client will be able to see it. The entire purpose of using this ICICI Bank has recently launched a series of 5 ads for its initiative is to make sure that we remain highly relevant to the iMobile digital platform. The efforts have been to make the bank’s user and understand his journey from the moment he shows an communication light-hearted and easily reachable to the bank’s intent to open an account. We are confident that this tool will target customers. The communication created for the digital help us to effectively pitch our offerings at the precise moment medium, shows just how many banking needs can be fulfilled when the client needs them the most, thereby targeting a much without having to go to the bank. The campaign shows inanimate higher acceptance and usage of our services. This will also objects with human desires and aspirations, and how each of these ultimately lead to a significantly higher client satisfaction and objects achieve their aspirations without ever entering a bank. stickiness as the overall benchmark of services will improve.” Yes Bank is using voice and motion sensors to promote savings Analytics also helps contain risk. Rakesh Wadhwa of Future accounts and the attractive interest rates. SBI Life Insurance Generali India Life Insurance explains: “We believe that simple launched an innovative campaign to raise awareness about breast is better; we use analytics for cross selling products. It helps cancer. The ‘Thanks A Dot’ campaign is supported by the Women’s in understanding the lifestyle of the customers. It helps in risk Cancer Initiative of Tata Memorial Hospital. The program intends management, managing frauds and claims.” to empower women by educating them about early lump detection Analytics in marketing helps the finance marketers to learn through simple self-examination techniques. An easy-to-use self- the value of delivering a consistently outstanding customer training module to detect the early signs of lump formation can be experience, marketing analytics has emerged yet again as a must- ordered free of cost through SBI Life’s corporate website. have because of its role in transforming the customer journey. Motilal Oswal displays advertising on market specific sites, social media marketing and Google SEM and SEO to target

12 Banking Frontiers April 2019 Preferred Channels among BFSI Companies Leading Technologies Chosen For Marketing

Traditional Social Media

Radio 33% WhatsApp 20% Digital (Search CRM Engine Markeng, Print Social Media Conference / Events Facebook Opmizaon Instagram Arficial Intelligence & Affiliate Markeng) OOH / Outdoor Twier 20% TV Linkindin Big Data & Analycs 27% prospective customers for the lead generation. Further, the company should create engagement with the consumer in different ways. It is uses email marketing mobile app and website to target customers. about creating the long tail of marketing.” Fincare Small Finance Bank uses digital marketing channels like search engine marketing, social media optimization and affiliate Future strategies marketing to target the customers. ART Housing Finance uses SEO/ Marketing and advertising activities need to be more open to SEM, social media marketing, analytics and content marketing for create transparent relationship with the customers. A lot of focus creating relevant content for the customers to make their buying is moving to contextual advertising. For executing successful process easy. India First Life Insurance focuses on marketing marketing strategies, every financial marketer must focus on analytics, Google, website and other social media channels to reach improving the customer experience across channels and with every its customers. communication. Rajesh Sharma gives the details about the future marketing Learnings from marketing campaigns strategies that will be adopted by Capri Global: “We plan to continue Customer engagement and seamless customer journey are now to use offline direct sales channel (direct relationship model) as it being given top priority by the BFSI companies. So, what is it that is a dominant source for lead generation. In addition, developer finance marketers can learn as the whole segment is shifting to tie-ups will be another key source of lead generation. We also plan techno marketing? to expand our marketing initiatives through radio and newspaper Rushabh Gandhi shares his learnings: “Marketing combined advertisements in addition to a bolstered online presence through with technology has made an impact for creating an improved SEO, google ads, etc.” customer experience. Launch of AI tools like chatbot, Predictify - an Ramnik Chabra, director, Marketing at Motilal Oswal adds: “We app that identifies the best suited product basis customer needs - and have embarked on our ‘equity investing expert’ positioning exercise other digital launches have helped us do targeted marketing. Focus just recently. Soon our marketing plans would be pivoting around on customer engagement and VAS services is designed to provide our this focused proposition. This would be brought to life through customers special things in addition to core product. This is the start topical themes relevant to various audiences. Digital, audio visual of a new journey of deepening customer relationship.” and contextual media (engagement events, media articles, etc) Shailesh Pandey said: “Customers prefer convenience in would be the 3 primary channels. The mix would be calibrated accessing banking services. Significant number of customers use depending on the product and target consumers.” new age digital medium such as WhatsApp, Facebook & messaging. Pankaj Gulati of Fincare Small Finance Bank shares details: Customers recall strong messages with emotional connect.” “We are connected through mobile with our customers. As much as Peeush Jain, head, Retail Banking, at Lakshmi Vilas Bank said: 70-75% of our customers get messages through SMS. Since we are “The customer journey needs to be seamless through marketing to a very regional and local player, for the next 6-12 months our focus sales funnel. Digital is a highly responsive medium for targeting and on marketing spends is through the local channel, which effectively retargeting the customer.” means local market activation. In future, when we become more of a Suneel Yadav, VP & chief marketing & experience officer at ART national player, we will bring in the second level of ATL component.” Affordable Housing Finance, shared the learnings and marketing Marketing strategy is the art of creating value for the customer, strategies that are needed: “The conversion funnel is needed marketers need to ensure that this value is relevant and differentiated; to monitor conversion and drop-offs; we need clear consumer be it in the customer experience or brand communication. This marketing strategy for every part of the funnel. Identifying customer has drastically truncated the ‘greed’ and ‘fear’ emotional cycle. For personas and mapping the consumer journey is very critical for any executing successful marketing strategies, every financial marketer marketing effort. With the average attention span of the customer must focus on improving the customer experience across channels coming down day by day, right time and right place marketing and with every communication. Touchpoints such as mobile, video is what makes the difference. Marketing must be relevant and and social media continue to grow in importance, as far as marketing contextual. Experimentation and optimization are needed to be done strategies are concerned in the BFSI industry. on a continuous basis. The customer values personalized content. We [email protected]

Banking Frontiers April 2019 13 Cover Story Clicking sports celebrities

enerally, BFSI industry’s marketing campaigns are promoted with a Gserious tone that is often boring, and sometimes depressing. Life insurance companies’ advertising campaigns typically ride on the fear factor. To create more attractive communications, India’s BFSI sector is shifting its focus onto sports marketing and sponsorship, moving away from traditional events like festivals and social occasions. BFSI companies want to build their appeal with the new generation of customers. Rajeev Yadav, MD & CEO, Fincare Small Finance Bank (L), Vishwanathan Anand and Pramod Kabra, Chess master Vishwanathan Anand is Chairman Fincare Small Finance Bank the face of the Fincare Small Finance Bank Commonwealth Games 2018, Asian Games (captain of the Indian women’s hockey since 2017. His tenure with the company is 2018, the Tokyo Olympic Games 2020 and team) and Sukant Kadam (World #2 para for 2 years from December 2017 to December the National Games 2019 and 2020. badminton player). This is in line with our 2019. Pankaj Gulati shares his perspectives about the qualities of Vishwanathan Anand that integrates with Fincare Small Finance bank: “Talent, track record of being the best, tenacity and trust are the values which Vishwanathan Anand has that resonate with our bank. Brand Anand symbolizes the exact same personality that we believe will propel Fincare to be a champion institution. Game, power house and resilience are other two important qualities he has that reflects our brand value.” Sachin Tendulkar vouches for Oxigen Wallet Saina Nehwal, brand ambassador, Edelweiss Indiabulls Financial Services has appointed India skipper M.S. Dhoni as Shabnam Panjwani, head - Marketing ethos of #BeUnlimited and we believe their the brand ambassador, as Dhoni is very Communications at Edelweiss Financial journey and success will serve as inspiration popular in India and around the globe. He Services, reveals details about the for women across the country and for the is reliable, serious and mature persona - all #BeUnlimited campaign and sports brand next generation of Indian athletes.” these qualities relate to the brand. ambassadors appointed by the company: Sports leagues like IPL, IFL and Pro Oxigen wallet has appointed Sachin “We launched a campaign saluting the Kabaddi have raised sports viewership Tendulkar as its brand ambassador; the #BeUnlimited spirit of our athletes, aimed in India. This is one of the strong master blaster is the face of the company at garnering support for Team India for the reasons behind rise in popularity of the since 2015. Maher Sarid, group president, 21st Commonwealth Games, being held at sports celebrities. The participation and Corporate Affairs, HR, Brand & Market, Gold Coast, Australia. It was an integrated sponsorship in sports other than cricket, says: “Sachin has wide acceptance and trust 360-degree campaign with athletes like growth in rural viewership numbers and value among Oxigen wallet customers and Saina Nehwal, Dipa Karmakar, Rani rising number of sports start-ups are the he has an unblemished career without any Rampal, Heena Siddhu, Manpreet Singh other key drivers for the sports marketing controversies, and which defines us, our and Mandeep Jangra. Moreover, Edelweiss in BFSI sector. Compared with film stars core values.” provided a life cover of Rs 5 million to each as brand ambassadors, financial companies has deepened and of the athletes through group company are getting high visibility at minimal cost strengthened its endeavor towards building a Edelweiss Tokio Life Insurance. Edelweiss with sports celebrities. It will be interesting sporting nation. The group has inked a long- has also signed on India’s sporting legends to see finance companies experiment with term partnership with the Indian Olympic - Dipa Karmakar (first-ever Indian female and bring niche sports and international Association (IOA) towards sponsorship of gymnast to compete in the Olympics and leagues and events in India. the Indian contingent for all games including attempt the Produnova), Rani Rampal [email protected]

14 Banking Frontiers April 2019 NBFC Merger of 3 NBFC categories leads to harmonization The (RBI) through a notification in February 2019 effected the merger of 3 existing categories of NBFCs into a single category. Akshay Bhargav, partner at corporate law firm Khaitan & Co, outlines the benefits of the decision:

N. Mohan: What is the significance of expected to get increased flow of credit RBI’s recent notification merging 3 distinct from the banks. types of NBFCs into a single category? Akshay Bhargav: Over the years, there Which are the major changes that will have been several categories of NBFCs and come into force in the structure of NBFCs different sets of regulatory compliances. post-merger? The recent notification, merging Asset The following major changes have Finance Companies (NBFC-AFC), Loan come into force post the merger: Companies (NBFC-LC) and Investment (a) Principal Business Test: An NBFC- Companies (NBFC-IC) into one category AFC was previously defined to mean called ‘Investment and Credit Company’ a financial institution carrying on as or ‘NBFC-ICC’, reduces the complexity its principal business the financing of arising out of multiplicity of categories physical assets supporting productive/ and simplifies the regulatory regime to economic activity. The principal a certain extent. It is in line with RBI’s business test was satisfied, if the suggestion in the bi-monthly Monetary aggregate of financing real/physical Policy Statement for 2018-19 on 7 February assets supporting economic activity 2019. Accordingly, the RBI through a Akshay Bhargav and the income arising therefrom, was notification on 22 February 2019 effected not less than 60% of its total assets the merger. related businesses with varying focus. This and total income, respectively. The Now, any financial institution carrying harmonization is also expected to reduce determination of the physical assets on asset finance as its principal business - compliance and monitoring expenses for that would qualify as supporting whether by making loans or advances or the NBFCs and the regulator. ‘productive/economic activity’ was otherwise for any activity other than its plagued with ambiguity, and the 60% own and the acquisition of securities and is How many Indian NBFCs will be impacted test was distinct when compared to the not any other category of NBFC as defined by this decision? 50% test applicable to all other NBFCs. by the RBI in any of its Master Directions At present, there are 12 categories of Pursuant to the harmonization, the - will be an NBFC-ICC. NBFCs based on the type of activity that aforesaid ambiguity has been settled is carried out. Per the Monetary Policy and the 60% test has been made How will this bring in better operational Statement, the harmonization of the 3 uniform with the 50% test applicable flexibility and harmonization? categories into 1 is expected to cover 99% for all NBFC-ICCs. The idea is to move towards regulation of the NBFCs. (b) Ceiling on Investments: A deposit by activity, rather than regulation by entity. accepting NBFC-AFC was previously The 3 categories, which largely dealt with The central bank has also modified the prohibited from investing more than financing activities, have now been clubbed credit rating methodology of the merged 20% of its owned funds in unquoted into one. As a result, any company which entities? What are the advantages/ shares of another company (not being is a financial institution carrying on either disadvantages? an insurance company), which was not asset finance, financing by way of loans Earlier, the benefit of risk weightage a subsidiary or in the same group as or advances or otherwise for any activity based on ratings was available solely that of the NBFC-AFC. This restriction other than its own and/or the acquisition of to NBFC-AFCs. The risk weightage for was unique to NBFC-AFCs. Pursuant securities as its principal business, will be other NBFCs was fixed at 100%. With to the harmonization, the aforesaid categorized as an ‘Investment and Credit the harmonization, all NBFCs (except 20% ceiling on investment is now Company’ or ‘NBFC-ICC’. the core investment companies) will be uniformly applicable to all deposit Thanks to this harmonization, the risk-weighted as per the ratings assigned accepting NBFC-ICCs. same set of regulations will govern the 3 by the accredited rating agencies. The (Inputs also from Vidushi Gupta, principal types of businesses making it easier for functionality of rating will now get associate, and Tanvi Arora, associate) financial institutions to carry on inter- significance and better rated NBFCs are [email protected]

Banking Frontiers April 2019 15 MSME Lending It’s the micro segment that provides contentment RBL Bank has a very specific focus on the micro segment of the MSME sector. Anshul Swami, head, Retail, Inclusion and Rural Products, explains how lending to this segment brings in rewards:

n MSME funding, banks in general “So, we looked at the bottom end of have been less enthusiastic about the this segment through an associate entity Imicro segment, which is the bottom end called Swadhaar Finserve, which now is a of the sector, in spite of the government wholly owned subsidiary of the bank and emphasizing that their fund requirements is called RBL Finserve. We have more than should be a priority area for banks. This has 1000 agents across 120 branches who only been mainly because it was rather difficult to do lending to the micro segment. These estimate their real earnings whereas in the agents meet the customers, understand case of matured enterprises or slightly larger their requirements, assess their profile enterprises, these have been filing returns or and creditworthiness. This is purely a tier- creating balance sheets or have credit history 2, tier-3 centers-oriented activity and not thereby making it easy for financial services related to any operations in the metros. institutions to assess the risk and lend to This is one way we reached out to the micro them. However, it is this very segment, that segment,” says Swami. is micro, which has been a focus area for one The second way was through its urban private bank, that is, RBL Bank. branch network where it had its standard “The micro enterprises do not necessarily products like small business loans. In this follow practices such as filing returns, creating case, the customers had some level of data cash flow, or preparing balance sheets,” Anshul Swami points out that available. In addition to these 2 distinct says Anshul Swami, head, Retail, Inclusion the creditworthiness of a micro sub-segments, there is also third segment and Rural Products at the bank. “These unit is ascertained mainly that the bank caters to. It is actually below enterprises have a lot of cash transactions as the bottom end of the segment. well. One part is that they do have little to no through physical checks and credit history, and secondly, they do not have personal interactions FUNDING JLG documented financials. And a significant “For example,” says Swami, “the lady of the portion of their business is dealt in cash. So, visits to the homes of the entrepreneurs are household in semi-urban areas would want while in other smaller ticket offerings that you organized so that the standard of living of to take up some income generation activity see in the consumer space, like personal loans the person can be gauged. “This gives me to supplement the household income. We and credit cards, these get sorted out because a perspective of the person, his financial offer Joint Liability Group (JLG) loans to of the credit history a bank is able to access capabilities, which is a sort of a customer such customers. In reality, this is the bottom and analyze and build mathematical models profile. But the problem is this is a subjective end of the MSME segment and financial to lend to. Even without bureau reports, I can activity. Secondly, it is time consuming and institutions tend to ignore this segment, lend, because there is alternate data available people intensive and hence the cost and time because they take this segment as part of the in their case. However, for the micro units taken are very large,” says Swami. microfinance portfolio. Nearly 25% to 30% there is no such data available. So, the ability This, according to him, has limited the of the microfinance loans go to this segment. of an institution to actually reach out to these number of players, who have entered this We have categorized this segment as part of entities which are at the bottom of the credit space. However, for RBL Bank, given that its the MSMEs. For example, out of every `100 structure is then based on how much one can roots are in Kolhapur, it was already into this we lend in the microfinance space today, do on the ground. So, one needs a large set of segment in a considerable way and exposed to nearly `20 is used in the micro. And `50 people on the ground to go and meet them, the risks that go with lending to this segment. gets used in agri, and the rest is used in allied go to a shop and see how much stock he has - activities.” a spot assessment,” says Swami. SEMI-URBAN, URBAN The bank services this sub-segment The bank therefore realized that in order through RBL Finserve as well as business HOME VISITS FOR ASSESSMENT to really reach out to this segment, it has to correspondents. This clientele is serviced So the bank devised a process by which look at the customer in 2 ways. through some 800 odd branches. Broadly,

16 Banking Frontiers April 2019 this is how we are trying to reach out to the micro segment within the MSME segment. Swami says the new fintech players who profess to be servicing the MSME segment, do not cater to the bottom end of the micro segment. They actually cater to the higher end of the micro, who have some kind of information available. “So, if you do not have information, it is struggle for everyone including fintechs,” says he. A kirana shop owner who is a typical aspirant for a micro credit ASSESSING CREDITWORTHINESS How is the creditworthiness of these GST GAMECHANGER say increase the loan amount and reduce the customers assessed? He points out that today, even micro interest rate. That is how it works. So, the “For every customer,” says Swami, “we enterprises are registering under GST customer in reality grows with us.” run a bureau check. If details are available, because they are seeing the advantages Such micro enterprises are often it is alright. What is more significant is of doing so. For example, large entities to managed by sole proprietors/owners and the personal discussion we hold with whom these micro segment supplies insist they are essentially entrepreneurs and these customers. We do it at their working that they register under GST. However, passionate about their enterprise. As such premises - maybe a small workshop, or a in absolute terms, the impact of the tax they do not default intentionally. One of the kirana shop or his place of business. We collection of this segment - that has a top reasons for defaults, says Swami, is the land up at this place and have a conversation turnover of `1 million and below - is 1.5%, delayed payments from their suppliers. The and try to understand and determine his which is fairly small. The loans that banks other important reason is the fact that they financials. We also take references from give to this segment are linked to that. themselves are not organized or disciplined. his trade partners or businesses in the He also adds that as per the MSME So, they will use the loan availed for purposes neighborhood and these references help Census, 94% of the total number of units other than intended. “I will always say that us understand what exactly the business were micro enterprises and hence it is huge, if your banking is not regular, you will lose potential is. Given that this is subjective, and this includes whatever is registered opportunity to avail funding. If your banking the datapoints from which you can cross- and not registered as well. “We cater to the is regular, you stand to gain,” he adds. check that subjectivity help you come to a unregistered entities as well. What we look better conclusion.” at is cashflow. That is most important for us WHAT IS BONUS To what extent these assessments in any kind of lending,” he says. While the regulator does not allow any sort have proved to be correct in terms of their of bonus or discounts or monetary benefits delinquency or defaults? COLLATERALS for timely repayments, what actually Swami says the portfolio now is well What about collaterals for these micro units? happens is if the customer has a good under control. “In fact, there are 2 parts Swami responds: “As I mentioned history of repayment, in 12 to 18 months, to the delinquency in this segment. One earlier, we do 2 types of financing - funding banks give better terms in the next loan he part is the assessment we are carrying out. the urban entrepreneurs and the semi-urban would be availing. “We are open to giving The second is the fact that any kind of an and rural entrepreneurs. For the urban him a larger amount and lesser interest external shock can hamper the business. customers, it is unsecured lending where rate,” says Swami, adding: “These benefits This segment is more susceptible to such there are no collaterals. If the customer is of course come into play. The customer is shocks. So, obviously, you cannot say you a large entity and has property and other making himself creditworthy. That itself are underwriting an event. But it happens.” holdings, these become collaterals. In the is a bonus for him. When he goes in the What percentage of the total MSME micro space in the semi-urban or non- market as a creditworthy customer, there loans of the bank does this micro segment urban centers, basically what happens is the is a whole lot of difference in his chances of account for? customer comes to us and takes a relatively getting loan on preferential terms. All the “Our total credit exposure of the small loan and start off as an unsecured financial institutions would want him, and industry as of September 2018 is `105.5 borrower. Once we are comfortable with he does not have to struggle to find a lender. trillion, out of which MSME accounts for the customer based on his repayment So, for a first-time borrower, it is good `24.7 trillion and within MSME, micro history and business growth, we entertain that he creates a good repayment history accounts for `4.3 trillion. in value terms the this customer in a slightly different manner. and maintains it. If he pays in time, he is micro segment will not be significant, may He can come to us and seek a loan and say he creditworthy, and his future borrowings be 10% to 15% but in terms units, it will be has a particular collateral and whether that depend on this history.” much larger,” says Swami. is sufficient for a higher loan. He can also [email protected]

Banking Frontiers April 2019 17 Encouraging Women Corporation Bank improves women representation in workforce The ratio of women workforce improves to 31.27% in the last 3 years:

.V. Bharathi has assumed charge as Complaints Committee members have been MD & CEO of Corporation Bank on prominently displayed at all our branches/ P1 February 2019. She came to the offices,” says Bharati. bank from where she was an The bank has separate toilets at all ED. Besides her, Corporation Bank’s board branches/offices and separate rest rooms of directors has another woman director – of the bank for women employees. Chitra Gouri Lal. The bank today has a staff During 2018-19, in direct recruitments strength of 19,080. of our bank, the representation of women Bharathi points out that the bank has in officer cadre is 31.5%, in clerical cadre 5967 female employees as on 31 December 29.44% and in sub-staff cadre 57.14%, 2018, which is 31.27% of the total workforce. says Bharati. Women officers comprise 27.62% of The bank has identified 10 centers at officers’ cadre. Assistant manager (Scale workplaces having more than 50 employees I) has the highest level (37.87%) of female at each center, for setting up creche/ day- officers, followed by Manager (Scale II) care facility. “We are working out the (25.21%). PTS and clerical cadre among modalities for setting up these facilities,” ‘award staff’ have 1.64% and 35.80% female says Bharati. employees respectively. The male- female ratio in total PV Bharathi reveals that employee attrition at the bank in the last Posting Provisions attrition among female 3 financial years are: 3.5:1, 2.9:1 and 3.4:1. Promotion opportunities for female employees at the bank is one Says Bharathi: “Out of total attrition of 37 employees in Corporation Bank are at par employees in the current FY, there are 26 with male employees. In case of transfers, third of male employees males and 11 females, making a male:female women employees are posted to branches/ ratio of 2.3:1.” offices nearest to the place of residence “We sent SMSs to all women customers Out of total attrition, the average of their parents in case of unmarried and employees of the bank wishing them on percentage of women employees in the last employees and nearest to the place of Women’s Day and as part of CSR activity, 4 years is 25% in comparison to 75% of male residence of their spouse in case of married donations have been made to women’s employees. “Attrition of 25% in respect of employees, subject to administrative orphanages and women’s old age homes.” women employees is normal, if we compare exigencies. Says Bharathi: “Where both with the 31.27% of women in the overall staff wife and husband are employed with our Facilities & Concessions strength. Main reasons for attrition include bank, they are invariably posted at the same A woman employee in the bank, who has career progression and age-related health centre. We have 15 ‘all women’ branches put in a minimum 5 years of service, can issues, but not related to working conditions across the country and 322 women are avail 2 years of sabbatical leave in her entire in the bank,” says Bharati. heading branches at various levels and 3 career for purposes like medical treatment, zones are headed by women managers.” care of family members or children, higher Opportunities, Empowerment studies, visiting spouse, etc. During 2018-19 Can any nation progress with its women Celebrating Women’s Day up to Q3, as many as 36 women employees denied equal access to opportunities and With women constituting 31.27% of the total have been sanctioned sabbatical leave. adequate safety and security? workforce, it is critical for the bank to design Woman employees can also avail Bharathi feels women continue to suffer policies and programs to attract, retain maternity leave up to 6 months at a disproportionately in many countries, and engage them, and also to reinforce its time. “We have sanctioned maternity including India, from poverty, lack of commitment to these employees. “During leave to 289 women employees during education, lack of access to health-care, the current year, we have taken the initiative the current FY. The provisions of sexual domestic violence, lack of job opportunities, to provide women with effective counseling harassment of women at work place lack of pay-parity, etc. Even today, the and social support so that they can transform ‘Prevention, Prohibition And Redressal reality is that an overwhelming majority life challenges into positive change and Act 2013’, along with names, telephone of women are concentrated in low-paid, growth,” says Bharati. numbers and addresses of the Internal lower-skill or domestic occupations. It

18 Banking Frontiers April 2019 Corporation Bank improves has been known worldwide that working representation at all levels of business. “All impact resulting in more women candidates women continue to bear the major share organizations must adopt a 3-pronged joining the bank at entry level, thus improving of household work and childcare, says she. approach of attraction, retention and the overall representation. The vision of our women representation in workforce “India has one of the lowest female development of women at various stages bank is to improve the gender diversity in its labor force participation rates (LFPR) in their career lifecycle. More and more organization,” says Bharati. among the emerging market economies women should be empowered to continue and developing nations. LFPR is usually work while raising families, handle higher Careers for Women calculated as the share of women who responsibilities and emerge as leaders in the Over the years, the working environment are employed or are seeking work as a years to come. Our bank has been taking all has evolved to support women in their proportion of the working age female initiatives to provide such women friendly career aspirations, which help in delicately population. Women are also severely facilities,” she says. balancing the responsibilities of work underrepresented at senior management place and household, says Bharati, adding: and leadership levels,” she says. Targets, Vision “Business acumen and leadership do not The female LFPR is highest in The ratio of women workforce in Corporation come exclusively to men. Women have proved developing and developed countries, and Bank has improved from 30.55% to 31.27% to be better than men in many areas. Women the lowest in Arab countries and North in the last 3 years. At the time of recruitment employees have come forward to grow in their Africa. The LFPR in India fell to 26% in itself, the candidates opt for the bank of career by shouldering higher responsibilities 2018 from 36.7% in 2005, amid lack of their choice, hence the bank does not have and to face the newer challenges at par with access to quality education and underlying a say in the number of women joining the male employees. They believe in their social, economic barriers limiting the the organization. “We will endeavor to capabilities and demonstrate confidence opportunities for women. create conducive environment, congenial level. Above all, the general perception about Bharati feels that organizations should atmosphere and career progression for women working women has changed for the better provide structured on-boarding, flexible employees, which may prompt more women and there is acceptance for women to break work-options, focus on mentoring, on the candidates to choose our bank as their first the glass ceiling and move upward. This job learning for women candidates, creche choice while applying for the post through opportunity should be utilized fully.” facility and need to strive for more female IBPS. Such an effort will have a positive [email protected]

Banking Frontiers April 2019 19 EXPO PARTNER DATA CENTER TECHNOLOGY PARTNER KNOWLEDGE PARTNER Conference Report

Presents

BANKING FRONTIERS’

Frontiers in Transformation2019 AWARDS AND CONFERENCE 8 CEOs from BFSI & IT companies share their perspectives on transformations in BFSI industry at Finnoviti Conference 2019:

Suresh Sethi, CEO, India Post Payments number with QR code so that our customers & CEO - Suryoday Small Finance Bank Bank need not remember account numbers and the Trying to innovate may not solve the Things are changing regularly in the transaction can happen by scanning the card. main problems of the customers of banks. BFSI sector due to the transformations in We are trying to solve the problems in a the industry. India Post is a 150-year-old Sudhakar Ramasubramanian, MD & simplistic manner. Transparency is an organization; it has strong distribution CEO, Aditya Birla Idea Payments Bank issue with banks in India: for example, channel. It represents trust among the last Payments banks in India are ‘limited some banks charge program management mile customers, which is normally not seen banks’ in terms of product and service fees and customers have no clue as to whom among many of the financial companies options - they have transaction limit of to interact with or complain about this in India. has `100,000 and they are not allowed to lend charge. We have over 1 million customers. the largest network in the world - 155,000 and invest. Aditya Birla Idea Payments Customers ask several questions while distribution points, of which 129,000 are in Bank is changing the definition of the opening their accounts like – Is Suryoday rural India. It also a has a strong physical payment banks - we are not a bank that Small Finance Bank a scheduled bank or infrastructure. We are focusing on core lends, rather we are a fintech company that non-scheduled bank? banking and connectivity. As per RBI accepts deposits. Traditionally banks are a We are trying to reduce the cost of guidelines, the last mile customer needs location to take money and give money, but operation on lending from 7% to 3%-4 %%. to be real time online at the time of the we are the game changer in the industry. In the financial sector we need to go step banking transaction. We sell bus and train tickets and provide by step and banks need to use technology We have postmen equipped with a eCommerce facilities for customers. We to bring scale. In China, merchants do not smartphone and biometric device connected are trying to reach less accessible areas of accept cash, they prefer digital transactions, with our banking platform going to the the country, and we also trying to create while in India merchants do not accept customers. He facilitates fast, easy and safe banking as a platform to offer all these card normally and they prefer cash. This is opening of bank accounts. This is possible services through our partners. the big difference between the two highly in one tap, something unimaginable 10 Around 500 million people in India populated countries of the world. Each years ago. This the transformation we have use various digital platforms. Among market requires specific strategies. seen in our digital journey. them 100 million use these platforms for We are focusing on creating a monetary transactions. The remaining 400 Rajesh Mirjankar, Manging Director, digital ecosystem that leverages public million use digital platforms like YouTube, Infrasoft Technologies infrastructure. Simple initiatives like Facebook and WhatsApp. Aditya Birla InfrasoftTech is a 23-year-old company. providing door step customer service is a Idea Payments Bank foresees opportunity We started our business by providing core transformation for payment banks like us; in targeting those 100 million people that banking solutions to Indian banks. Now it is a strong pillar on which we are trying do monetary transactions. we are also offering compliance solutions. to establish our business. Digitization has We have a network of 200 million We are an innovative company and do helped in creating cashless, paperless and retailers who do telecom related work for us. continuous innovations to be relevant in presence less models for our customers. We are focusing on making our customers the industry. UPI and the entry of the new People in rural India face challenge life easier. We have created UPI based chat players like Google and Amazon in the with debit cards - they do not know how platform for our customers. payments space have changed the whole to operate debit cards while doing ATM scenario in India. We provide our payment transactions. So, we have enabled account Baskar Babu Ramachandran, Co-founder solutions to 40 banks in the country and in

20 Banking Frontiers April 2019 the last 1 month, our top 8 customers have done 130 million financial messages. We are a digital solution company and not a transaction management company. In the last few years, we have undertaken 3 levels of digitization - virtualization, mobility and cloud. We are transforming ourselves in areas of AI and cognitive analytics. In management schools you learn about product lifecycle, but right now IT companies are scrapping products within a year, because the product becomes A panelist making a point irrelevant in that span of time. regulator’s side - the amount of innovation work in financial services as well. For Vijay Mani, Partner - Financial Services companies can create by interacting with such platforms, representing customers, Consulting, Deloitte India the regulator will change and disrupt the the entire work flow can have a variety of Changing customers are triggering existing business models. vendors as options for the given sub tasks transformation. They are starting points (similar to the assembly line approach). and drivers of change. There is lot of Rakesh Jain, CEO, Reliance General Whenever the existing vendor of the part customer experience shaping outside Insurance of the supply chain of the given sub task the industry, but the fundamentals Insurance is relating to risk, which gets disrupted by an innovative solution, of the business are not changing. The is in everybody’s life - be it individual, the newcomer can end up becoming a way business is changing, the customer government or the corporates. Claims is the part of the supply chain of that integrated experience is also changing. Fintechs key product of the insurance companies. platform. This can ensure that each sub are very good in solving problems, they Transformation is the objective of our task of the supply chain gets delivered by are coming up with the solutions that company and customer expectations are whoever offers the given service element in are very innovative. Fintechs that have changing. For insurance companies, risk is the most innovative way. For example, if innovative business models will thrive and unique, but the customer expects unbiased the KYC is to be done, all the KYC players do partnership with the existing players. services. We handle 1 million claims in a can be in a drop-down menu. Similarly, year and 3000 claims every day. Interacting for recovery, payments or any other Sachin Baburao Pawar, Head - Data with our customer via WhatsApp is a major services, various players can be a part of Centre, APC Schneider Electric transformation. A mixture of call centre, the integrated end to end supply chain of Hardware technology is getting bots and people are needed to meet the that platform. Availing financial services refreshed every 2-3 years. We are focusing customer expectations by the companies. on those platforms can be an extension of on hyper converged infrastructure the customer experience, which leverages building to make available network and Ajay Bohora, Founder & CEO, HDFC the economies of the customer experience solutions together. We are taking about Credila for the existing FAANG players etc. more data and more connected products. In the backdrop of emerging trends In other words, millennials may Schneider provides cloud-based solutions such as sachetization of products and rather buy a product or a service from an and recently launched data management services coupled with the overall trend integrated platform which offers them infrastructure services. Security of the of disinter-mediation, it is important to end to end solution, eg buying a car can data and availability of the network are the think about a disruptive model which can be an end to end digital journey, right from two prime factors. Reliability, availability unfold for the millennials. Millennials are how to select the vehicle, comparison of and simple to use products are the main not looking for economies of scale, but the prices, comparison of the brands, requirement of the BFSI companies. for economies of customer experience. If performance, etc. The option to pay or opt We are looking at connected products companies like Apple, Facebook, Amazon, for an EMI can be chosen by the customer and we are using analytics engine to Netflix, Google, etc. (FAANG) offer as a part of that end to end digital platform. analyze the data. Managing infrastructure products and services in innovative ways, Banking is required, but the question is a challenge for us. We are looking at they can redefine the customer experience. is from the perspective of millennials will improving operational efficiency and The best practices of the manufacturing the banks be required in the form that the operational cost. There is good amount of sector like assembly line approach in banking sector currently is. learning, that can be generated from the which there is a global supply chain, can [email protected]

Banking Frontiers April 2019 21 EXPO PARTNER DATA CENTER TECHNOLOGY PARTNER KNOWLEDGE PARTNER Conference Report

Presents

BANKING FRONTIERS’ 2019 AWARDS AND CONFERENCE

HELLO Phygital - the next Hybrid Mantra HYBRID Innovations for the Experiential World for financial services business

Experts from the BFSI industry share their views on phygital model of business at Finnoviti 2019 Conference:

K.V. Dipu, President - Operation & insurance policy can be made a complete for settlement of the motor insurance claim, Customer Service, Bajaj Allianz paperless process. But there are constrains which cannot be completely digitized. For The insurance industry can be like visiting hospital for settlement of the settlement of the motor insurance completely digitized, and the issue of the medical insurance claim and visiting garage claim, the surveyor has no need to physically

Deliberations in progress

22 Banking Frontiers April 2019 examine the damaged car as the customer can capture photographs of the damaged car and send them to the insurance company. The insurance company can use different technology tools to check the authenticity of the claim. Insurance companies do not run hospitals and garages, so they need partners to reach the last mile customers. Even Amazon has started opening physical stores; these physical stores are backed by customer data which helps in understanding the buying patterns of the customers. Customers who share their data with the company gets customized A view of the audience products. For example, telematics device helps insurance companies to understand insurance - and to sell this through a dealer in the coming years. If the customer fails to the driving patterns of the customers, in Bilaspur, we need to digitally connect understand anything in the digital world, driving habits, insurance premium, etc. with him. We have a special application then there should be a link to connect him Insurance companies in India face for the dealers, for online issue of with the physical process. For example, if challenges of availability of data and insurance policies. Toffee Insurance helps the customer has applied for a demand unstructured data. Once the data is in onboarding the dealer and make them draft online, he needs to visit the branch to available, the companies can segregate the understand the application. Awareness of collect it. Bank branches are spread across data from the sales and service perspectives. the product is required to issue the policy. the country and they have good reach. They can use facial recognition technology We have tools that will help the dealer. Fintech companies help to bridge the gap in some processes for easy and quick Phygital helps in creating the wider pool and there is a need to leverage this ability of settlement of the claims. and acceptability of the financial ecosystem the fintechs with the distribution channels The whole idea of claims processing and products. The idea is to create a to meet customer needs. Most of the laws faces a conflict between speed and fraud. seamless user experience for financial regarding security, data privacy, sharing of If we curtail the fraud by using technology, products for the customers. Technology data are very restrictive. then we can do faster payments to take and product innovation help in creating a The partnership between banking customer experience to a completely new good distribution network for insurance distribution network and technology is level. There is no single player who offers companies. here to stay and it will be the game changer end to end services to the customer, and Lack of data is the biggest challenge for for the industry. Fintech companies in the entire process of claim fulfillment is us as data plays a critical role in product India are providing their best services to through partners and phygital is the nature creation and customer service. Indians are the customers. There are some gaps in the of the industry. less sensitive about their data compared industry in areas like onboarding of the to people in the western countries. The customer, transaction, customer query Rohan Kumar, CEO & Co-founder, government is making critical laws around and in the management process and the Toffee Insurance data privacy, which are very crucial for the phygital model helps in filling these gaps. To understand the importance of companies to carve out niche experience phygital, companies need to understand for the customers. These companies need Anand Sundaram, Group Executive VP - the problems faced by the customers to structure unstructured customer data Analytics, Yes Bank for accessing insurance products. The so that product prices can be determined Technology, analytics and APIs help population of India is around 1.3 billion and correctly. If they don’t have structured data, banks to validate credit risk and customer there are 70 million online transactions; Ity will be difficult for these companies to information. Fintech companies provide digitization alone cannot help the company price the products. areas of specialization and easy options to to reach the inaccessible territory. The Phygital models will continue to survive the customers. The customer preference has companies need to focus on product and physical models combined with digital changed over the years. Customer service innovation and to make the product easily will provide better services to the customers. is key in offering products and services. understandable to customers. It is customer preference that is priority - There is a need to leverage technology Jaya Janardan, Chief Operating Officer, whether he wants a relationship manager to be able to do online transaction. For Ujjivan Small Finance Bank or chatbot to address the problem. example, we have a product - bicycle Phygital is the only way to move forward [email protected]

Banking Frontiers April 2019 23 Conference Report

Governmental role in engaging fintechs Fintech experts share their views on government initiatives to promote start-up fintech’s in India at Technoviti 2019:

Suniti Nanda, Fintech Officer, Government of Maharashtra Every Indian state has its own fintech policies. The startup policy adopted by the Maharashtra government was not rightly focused towards fintech sector as there was need for more detailing and hand holding policy - particularly for the fintech segment. To overcome the weakness of these policies, the state government had introduced a separate policy for the fintechs. Mumbai is the financial hub and Maharashtra is one of the forward states of India. The state government had in fact taken the initial Panelists listening to a point being made lead to support the fintech sector of India. Space and capital are critical aspects for countries like the US, China, the UK and startups and help them in achieving their fintechs, which need to be addressed. We are Singapore for Invest India. There are goals, as the owners of the startups and other trying to bridge the gap between fintechs, several changes in the fintech landscape and team members have left their jobs to create financial institutions, regulators and the regulatory changes are the key challenge for big opportunities for the country. academic sector. For taking fintechs to the us. We want to understand the pain points global level, we have approached the fintech faced by the industry and want to come Sailesh Ghadia, Nominee Director at hubs of Singapore, the UK, Bahrain, the US out with policies to make the environment Punjab & Sind Bank and Australia. The adoption of technologies conducive for the Startup India initiative. Technology development is a part of the by startups is one of the biggest challenges We have over 15,000 startups registered overall development of the country as the for us. Different departments of the with us and Invest India helps in connecting country cannot grow without technology companies need to join hands, they need to potential investors with startups. We have development, especially in the financial come together to achieve the desired results 300,000 users of our portal. services sector. Our young and talented for the fintech sector of India. population prefers to work in countries like Abhishant Pant, Founder, The Fintech the USA, the UK and Australia, as they do Yash Gandhi, Invest India Meetup not get basic facilities and rewards in India. Invest India is the first point of Opportunities are too big in our Cost is the main constraint for us. contact for investors entering the Indian ecosystem. The Maharashtra government Corporate governance cannot be market. The idea behind ‘Make in India’ has provided funding for startup fintechs. But accomplished without technology and initiative was to transform India into a there are many things that need to be done. there is need for the latest technology. global manufacturing hub and making it Massification is missing in the next level of Most of the banks in India have achieved the most attractive place for investment technology adoption. New technologies like good corporate governance and better across the globe. In the last few years, we AI, Blockchain and ML are not the part of NPA results. The high cost of software have worked with 7 Indian and foreign the academic curriculum in India. These and technology infrastructure puts hurdles fintech companies and helped them in technology topics are needed to be included on the banks while adopting the latest regulatory and advisory aspects, and in to the academic curriculum of schools technology. Only 40% banks have created in finding the right stakeholders in the in the country. States like Maharashtra, the required technology infrastructure. government and right partners in banks and Kerala, Telangana and Andhra Pradesh Lack of such infrastructure is an obstacle finance companies. are taking initiatives to promote fintechs. for the country’s development. We have received good response from The state governments should respect the [email protected]

24 Banking Frontiers April 2019 Conference Report

Work Force TRANSFORMATION 2.0 Dell Technologies, Dell, EMC, Dell EMC and other trademarks are trademarks of Dell Inc. or its subsidiaries. Microsoft is trademark or registered trademark of Microsoft Corporation - A BFSI Perspective in the U.S. and/or other countries. Other trademarks may be trademarks of their respective owners. Banking Frontiers organized an unconference in association with Dell India where IT experts from the BFSI industry shared their perspectives on work force transformation:

Vivek Sawardekar, Product Technologist, Dell to the top management. There should be an application to control In today’s digital environment, the work place is changing data breaches. rapidly; it is no more an office activity. Employees can work from Rajendra Mhalsekar, Sr Director-Wholesale Banking anywhere, banks and NBFCs are acquiring customers on the go, (IT Support), IDFC First Bank banks are even going to the customer to open bank accounts. The Laptops and desktops are more secure compared to the mobile, millennials want to do things in a faster and simpler way. It is mainly because desktops are immovable. Some of the features struggling to manage the cost and at the same time offer a digital of mobiles can be introduced in desktops like touch screen and experience. It is measured based on user experience. We want to android or iOS based mobile applications. The vendor companies connect BFSI companies beyond hardware configuration and want should introduce user-friendly devices. Data security and customer to evolve ourselves in creating innovative solutions for banks. experience play a very crucial role in the finance industry. In today’s digitized world, IT is the digital partner for the Companies cannot have 100% data security. There are many data BFSI companies; it is no more a cost centre. IT provides devices protection tools but each of them has its own limitations. In most to ensure connectivity and helps employees to innovate faster. We of the organizations, the vendors work with the employees in the have started providing services beyond hardware. Currently, we are common office premises. In IDFC First Bank there are 45 different focusing on configuration of systems, ticket management, patching vendors working with us on the same floor. Many organizations and automation. The adoption of the new technology will provide are confused about BYOD or use of employees’ mobile phones. We advantage to the companies and it will help businesses in achieving can use mobile device management solution or mobile application goals. It is performance, durability and system efficiency that we management solution for data security. provide to our customers. Vinay Rao, Head - Marketing & Brand, NKGSB Coop Bank Santosh Mankar, AVP-IT, SBI General Insurance Most of our workforce use desktops, while senior managers and At SBI General Insurance for customer acquisition, we use the leadership team use laptops. Working on a laptop is considered mobiles and tabs. But, for heavy processing and data entry jobs a prestige in our bank. The uses of hand-held devices for marketing desktops will continue to be important. We can add new features is still not popular, but we are in the process of adoption of these of smartphones like touch screen to desktops; it will increase devices for marketing activities. We think like a middle-class family productivity. As an insurance company, we face regulatory while purchasing software and hardware. Major decisions about challenges as also challenges like data thefts and other risks. technology purchase are taken by our board of directors. WhatsApp WhatsApp has become the mainstream communication channel for is an important marketing tool for us. Technology updating and new us and the flow of WhatsApp communication is from the lower level designs are the main reasons for us to change the hardware devices. Gulshan Narula, AGM-IT & Security, ICICI Bank An argument is being made The combination of MA and MDM (mobile app management and mobile device management) is providing promising results for the BFSI companies. There can be restriction on number of devices on which employee can access the data. For example, apart from desktops employees can access the data using mobile devices like mobile phones or tabs. Banks can introduce an app that will be separated from the other apps of the mobile, so the company’s data is secured. By using the bank application, the employees cannot send the data to the outside world by email or WhatsApp. Data is the new oil for the industry. It has its own implications. Banks have started implementing data loss prevention and other functions to avoid data leakage and to check frauds. [email protected]

Banking Frontiers April 2019 25 Securities Trading AI & ML shape digital strategy at Kotak Securities Jaimit Doshi, Exec VP – Marketing at Kotak Securities, explains how the company is capitalizing on the opportunity of digitizing of financial services by simplifying the world of investing:

Mehul Dani: How has the digital strategy of high availability of platforms to give our your company shaped up and implemented customers phenomenal service experience. in 2018-19? Additionally, customers are given secure Jaimit Doshi: Our digital strategy has mediums of interaction like call, chat, largely been shaped up with the usage of WhatsApp, dealer or app – we have enabled machine learning and artificial intelligence. all. Customers can choose their preferred It ensures that we give our customers the medium accordingly. most relevant information and advisory that he is seeking. It’s helping us to service What are the new online, digital marketing self-trading customers, increase the clan campaigns & promotional efforts? and launch cutting edge services like ‘Chat Our Free Intraday Trading campaign this to Trade’ through WhatsApp. Going digital year has been most successful. We introduced has helped us shift the business online. it to democratize stock market participation for retail investors, especially from cities What are your tie-ups and other initiatives beyond metros. This is a first-of-its-kind for customer engagement using AI, ML? offering that gives self-directed investors We have achieved a 25% rise in our email freedom from brokerage on intraday trades open rates and lead conversions in customer across cash, future and options segments engagement by using Netcore’s AI Engine Jaimit Doshi believes Free at an annual subscription of `999. Further, ‘Raman’. This has led to increased clicks, Intraday Trading campaign has investors get free access to KSL’s research and resulting in increased lead conversions. We been most successful robust technology platform for seamless and also leveraged the Send-Time Optimization secure execution of trade transactions. (STO) feature of Raman’s ML suite. This How much business have you garnered We also launched the ‘Refer and Earn’ helps companies communicate with each online and offline 2018-19? program to boost retail participation in the customer at the right time, ie when the The ratio of online and offline business is Indian stock markets and enable wealth customer is most likely to be engaged on a 60:40. We are also building on DIY products, creation opportunities for new participants. particular channel – in this case email. Backed so that customers can open their account Focused on our existing clients, the program by actionable analytics, STO gathers data online. Online is our strongest channel for will incentivize each customer up to 15% from the user’s pattern of use of the inbox to generating business, contributing almost value of brokerage generated by the person arrive at times when he/she is most likely to 60% of the leads. The mobile business has referred for life. We are present on all social respond to email communications from the been growing faster than web, and accounts media platforms – be it Instagram or Twitter brand. The emails then get triggered around for lion’s share of our overall business. or LinkedIn or Facebook, from millennials those times, so that the brand’s email lands Majority of our lead acquisition happens to people in their mid-life. into the customer’s inbox under the ‘primary’ from channels such as Google, Facebook, tab rather than under the ‘promotions’ tab. LinkedIn and Twitter where we find better How do you counter cyber frauds? This is how brands are able to boost top-of- informed customers who are cleverly We have strong compliance, legal mind recall. targeted through tools like Google AdWords and risk teams. We adhere to all rules, Further, we have recently tied up with and Facebook Business Manager. regulations, circulars, notifications of SEBI, Bengaluru-based Smallcase Technologies RBI and Exchanges. No cloud platforms are enabling retail investors to invest in How have you gained by deploying used, so risk is minimized. portfolios of stocks and ETFs with their analytics to increase business? existing trading and demat accounts. Our We are using analytics and deep learning What are the other digital and IT initiatives? customers can now take exposure to a variety to understand customer retention cohorts, We are capitalizing on the opportunity of of professionally researched portfolios at know what to recommend to the customer digitizing of financial services by simplifying zero expense ratio or management fees. The next, making him look at his portfolio in the world of investing. We want to offer underlying securities are held in customers’ a better way and pitch relevant products simple products and services, such that demat accounts, where they have complete based on risk appetite and trading behavior. everyone can invest and grow their money” control of their investments. We get one view of the customer and have [email protected]

26 Banking Frontiers April 2019 Securities Trading HDFC Sec doubles spend on digital transformation Nand Kishore Purohit, Head, Digital Strategy & Analytics at HDFC Securities, speaks about its trading platform and its contribution in business growth:

Mehul Dani: How has HDFC Securities’ Who are your major technology partners? digital strategy shaped up & implemented What is your capex and your opex for digital in 2018-19? How has it been received initiatives in 2018-19? by customers? What are the areas of TCS, Snapworks and Heckyl are the improvement? major vendors with whom we work closely to Nand Kishore Purohit: Digital strategy enhance the customer experience on a regular of our organisation has shaped up very well. basis. Since we are on our journey towards In FY 2018-19, we have followed customer digital transformation, our expenses on digital feedback-led development strategy, thus, initiatives have increased by almost 100%. The improving customer experience on our core size of IT team is around 200 people. digital platforms. We have launched new platforms and have also forayed as the first Please tell us about marketing campaigns organisation in Indian broking industry to and promotional efforts in the current FY. launch AI & ML enabled conversational How strong is your presence on social on-boarding and investing platform to media platforms? acquire and service millennials. As far as areas Nand Kishore Purohit outlines We primarily do campaigns using email, of improvement is concerned, we have to notification and SMS to our customers as work on hyper-personalization of customers. how marketing campaigns well as performance marketing to acquire revolve around increasing new customers. Our marketing campaign How much business is garnered engagement with customers revolves around increasing engagement with approximately online and off-line by your customer and to upsell products. We do lot company in 2018-19? HDFC Securities, you can register online of campaigns on various social channels As a result of above strategy, we have for investing in DIY SIP. Once you log in which helps us engage the target consumers reached a stage where 77% of our customers to your trading account, you can click on of different age groups. We have 11,000 transact online. Our digital revenue has DIY SIP tab and create a new SIP basket. subscribers / followers on Youtube, 284,000 grown around 25% this year compared to Alternatively, you can invest in DIY SIP by on Twitter, 78,000 on Facebook, 15,000 on last year, showing acceptability by customers. filling up an application form and submitting Linkedin and 1500 on Instagram. We are the first broker in the country to roll it to the address mentioned on the form. We out virtual assistant service through voice have a payment procedure for mutual funds What are your views to stay relevant based IoT devices. At present, a customer bought online. Order placement in mutual in increasing scenario of digitization of can choose from over 5000 schemes across fund transaction is facilitated through the financial services? 37 AMCs. existing online/adhoc mechanism. Digitisation is key to our strategy. Our digital strategy is not focused only on What are your digital and IT initiatives? How have you gained by deploying analytics developing innovative products and services HDFC Securities offers ‘Digify’, a unique to increase business? How is technology to our customers. We have implemented paperless platform to invest hassle free in put to use for CRM? What are you doing to NPS framework to understand customer mutual funds within minutes. Digify is a enhance customer experience? needs, learn from them and our product cloud-based document security service and We have implemented AI and ML based development roadmap is driven by virtual data room that allows companies to platform to service our traders and leveraged customer needs and reducing friction in track and protect files. Digify can be used analytics to deliver personalized portfolio journey. We have created an innovation lab on a web browser, and apps are offered for based alerts to our customers resulting in both whose role is to benchmark our services Android and iOS devices. One can purchase revenue growth as well as digital migration versus best in class products and services or redeem units of mutual funds via SIP of customers. As far as use of technology is from other industries and achieve same or lump sum mode and can also make concerned for CRM, we have developed AI, level of efficiency using technology. We have additional purchase of mutual fund schemes ML capability to on-board new customers undertaken other initiatives as well. We through the online platform. The units will through conversational on-boarding platform have setup a ‘Centre of Digital Excellence’ be allotted to one’s demat account as per (getstarted.hdfcsec.com) but also to enhance with around 300 resources to service our settlement period. engagement with the customer by providing customers digitally. If you have a trading account with them portfolio based alerts. [email protected]

Banking Frontiers April 2019 27 NBFC Get a customized, need-based loan Finway Capital offers not the run-of-the-mill solutions but products that specifically suits the needs of the customers:

inway Capital, unlike most NBFCs will take at least 15-20 days in processing or even banks, offers not the usual the application. But, in our case, he would Fsolutions, but need-based, highly receive the loan within 3 days.” customized financial products to its customers. This is made possible through CUSTOMIZED TECHNOLOGY the company’s tie-ups with more than 50 He emphasizes that the technology financial institutions. What is unique about infrastructure the company has developed its offerings is that it does not stick to any rigid is proprietary to the maximum extent product or policy but allows the customer to possible while other players are dependent choose an option that suits his or her needs on readymade software. “We have most effectively. everything customized. We work on a Finway is a brainchild of one-time platform that calculates and analyzes all the child prodigy Rachit Chawla, who aims things in one go. Generally banks follow a to humanize the lending process in step-wise process - step 1, then step 2, then India through his venture, which has the step 3 and so on. We execute all the steps unwritten objective of ‘empowering people simultaneously and this helps us to have financially’. Chawla explains Finway has the shortest TAT for loan disbursals. Our several innovative products which none loan sanctioning process is completed in 24 of its competitors offer. “Take for example Rachit Chawla affirms Finway hours,” says he. our Credit Inclusion,” he says, “which is understands the needs of the While the company has been growing providing loans to low-income consumers customer and then suggests a in a phenomenal way, it has been able who do not qualify for mainstream credit to maintain minimal NPAs. This has system such as CIBIL score. For these most suitable option been possible, says Chawla, because of consumers, we check their creditworthiness the company leveraging game-changing using our own methodologies developed We provide funding from the institution technologies in the financial services sector. using AI and Programmatic. Similarly, we which offers more at lesser price. Usually, The customer profile is thoroughly studied have Construction Link through which a a customer has only limited options when using technology-based evaluators, then a customer can seek a loan to build a house he goes to a bank. We work the other way team of experts review the profile before a and it is completely different from the run- around. We understand the requirement loan application is processed. If anything of-the-mill housing loan.” of the customer and accordingly suggest a suspicious is noticed in the profile of the product. Whoever comes to us doesn’t think loan seeker, the application is rejected. MARKED GROWTH for an alternative.” Finway Capital is now predominantly Finway Capital began in 2017 with a loan This is achieved through a multiple operating in NCR. But Chawla says it book value of `10 million and currently algorithm that has been developed, which is leveraging technology to increase the this stands at `140 million with negligible detects the exact need of the customer and outreach. “We are planning to open 50 NPAs. Chawla intends to reach `350 then through a reverse predictive analysis branches in the next 3 years and at least 10 million by the end 2019-20. The company gets to know which institution can fulfill branches in the current year. As war as our has 8000 plus satisfied customers. “We are the need. “Customers can register their geographical expansion is concerned, our growing at the rate of 20% on mom basis. request at our website, which automatically next priorities are Mumbai and Bengaluru,” In other words, we have grown more than 7 reaches to our executives and using Big he adds. times in terms of number of loans disbursed Data Analytics they inform the loan seeker Chawla is an avid talker and proponent since inception in 2017,” says Chawla. their eligibility for a particular product that of financial literacy. He makes use of social He speaks about the unique business is available,” says he. media in this effort - especially YouTube, model. “We have tie-ups with more than where he talks on various topics relevant at 50 financial institutions and based on the EASIER, FASTER LOANS a particular time. He believes social media needs of the customer, we choose an option He also points out to another facility that is the best platform to share knowledge that suits his/her demand most effectively. is provided: “Suppose someone needs `10 for the betterment of small businesses and We do not stick to any rigid product or million urgently and he has property to offer individual customers.” policy, but we offer need-based solutions. as collateral. Banks and other institutions [email protected]

28 Banking Frontiers April 2019 SD-WAN? WHAT DOES SECURITY HAVE TO DO WITH SD-WAN? THE SHORT ANSWER? EVERYTHING As part of their Digital Transformation initiatives, the BFSI sector has turned to SD-WAN to take advantage of its many benefits. However, embracing SD-WAN without a clear understanding of its security implications changes those benefits to liabilities.

Fortinet’s Secure SD-WAN solution delivers on all of the advantages that SD-WAN has to offer but with the full NGFW capabilities of FortiGate and FortiOS, the world’s most widely deployed security operating system. Fortinet’s Secure SD-WAN is part of the Fortinet Security Fabric, delivering comprehensive protection from the branch office to the cloud and beyond.

Fortinet’s Secure SD-WAN solution allows BFSI organizations to securely take advantage of all that SD-WAN has to offer.

For details contact:

North: Nitin Gupta, E-mail: [email protected], M: +91 93103 62598

South: Binu Ninan, E-mail: [email protected], M: +91 98400 36767

West, East, Central: Navin Mehra, E-mail: [email protected], M: +91 98925 60700

FORTINET SECURITY FABRIC A Security Architecture that’s Broad, Integrated and Automated www.fortinet.com/whyfortinet PMJDY Scheme 3 banks show sustainable growth in PMJDY accounts, deposits Fareed Ahmed, ED, Punjab & Sind Bank, S. Karthikeyan, DGM, Credit, Tamilnad Mercantile Bank, and Ajay Patel, chairman, Ahmedabad DCCB, provide insights into the flagship scheme Pradhan Mantri Jan Dhan Yojana:

radhan Mantri Jan Dhan Yojana (PMJDY) is claimed to be the world’s Plargest financial inclusion program which impacts people in the 20-65 years age group. It aims to expand and make affordable access to financial services such as bank accounts, credit, remittances, etc to hitherto deprived sections of the society.

High Enrollment Since inception in 2014, nearly 351.6 million people have been brought under banking in the country as on 20 March 2019 under this scheme. This includes 186.9 million women Fareed Ahmed Ajay Patel across rural and urban areas. As much as `953.82 billion is now available in these (`1.56 billion) are under SSSBA, followed respectively (premium collection `30.75 beneficiary accounts. Of this, `764.07 by SBJDY (91434 accounts, `240 million), million) in 2018-19. billion is in PSU banks, `164.70 billion in SBFIN (59418, `30.02 million) and SBJAN Punjab and Sind Bank has sanctioned RRBs and `25.04 billion in private sector (9640, `3.6 million). loans to about 700 people under Deendayal banks. Under the scheme, 278.30 million Earlier, the bank had issued RuPay Antyodya Yojana-National Rural RuPay debit cards have been issued to the Classic cards to all SBJDY account holders. Livelihood Mission (DAY-NRLM) and it beneficiaries as on 20 March 2019. It has now advised all its branches to issue has made good progress in the Stand Up Punjab & Sind Bank has opened total PMJDY cards for all the existing SBJDY India scheme. Says Ahmed: “Accounts 1.28 million PMJDY accounts, which hold accounts. It has issued smart cards for under the Stand Up India scheme have a balance of `6.85 billion. Of this, 86% are SBFIN Scheme. Says Karthikeyan: “We increased to 1599 with `3.54 billion as on operative accounts. The average balance in have issued a total 21,414 RuPay cards 25 March 2019 from 764 accounts with PMJDY accounts is `5340. The number of as on 31 December 2018 and 90.20% of `1.26 billion as on 31 March 2017.” RuPay cards issued are 1.15 million. the SBFIN account holders have smart Fareed Ahmed, ED of the bank, says cards. After enablement of AEPS – ON US Credit Linkage the bank has opened 200,000 accounts payment, we have advised the branches In the case of KCC loans, Tamilnad Mercantile and issued 160,000 RuPay cards under to ensure seeding and authentication of Bank has achieved 42.77% of the target in PMJDY during 2018-19. The bank has only numbers in these accounts so that terms of number of accounts and 70.36% in 18,491 (1.4%) accounts under PMJDY with these accounts can be operated using AEPS terms of amount outstanding for the loans zero balance. The bank has also sanctioned – ON US mode. ” granted through BCs and in case of General 63,467 overdrafts, amounting to `90.33 Ahmedabad DCCB has 196 branches Credit Card (GCC), it has achieved 33.70% in million. Similarly, it has opened 12,000 and in Ahmedabad, Gandhinagar and Botad terms of number of accounts and 43.33% of 11,000 accounts in Gram Swaraj Abhiyan districts of Gujarat as on 31 March 2019. the target in terms of amount outstanding for (GSA) and Extended Gram Swaraj Abhiyan Ajay Patel, chairman, says 972 persons have the loans granted through BCs. (EGSA) of PMJDY respectively. been enrolled in 2018-19 under PMJJBY, Says Karthikeyan: “In the case of KCC According to S. Karthikeyan, DGM, while 1276 persons have been covered under loans granted through branches, we have Credit at Tamilnad Mercantaile Bank, the PMSBY in 2018-19 and 31,170 accounts achieved 89.64% of the target in terms of bank has opened 685,944 accounts under have been opened under PMFBY (kharif-18) number of accounts and 99.81% in terms all the PMJDY schemes, with outstanding accounting for `67.64 million. The bank of amount outstanding and in the case of balance of `1.84 billion. The highest has also provided accident policy and GCC, we have achieved 98.15% in terms of number of accounts (525,452) and amount medical policy to 44,127 and 2792 persons number of accounts and 150% of the target

30 Banking Frontiers April 2019 in terms of amount outstanding for the loans Tatkal Yojana’. Through this they can get saving of all the SHGs is `31.04 million, out granted through branches.” additional loans. The number of SHGs of which `30.03 million belong to Sakhi Ahmedabad DCCB is trying to help associated with Ahmedabad DCCB is 4828, Mandals. The bank has granted loans of farmers to meet their incidental necessities out of which 3948 are Sakhi Mandals. Some `155.6 million to the JLGs.” by introducing a new scheme called ‘Kisan 3178 JLGs have been formed and the total [email protected]

PMJDY - Top PSU Banks As On 20 March 2019

40.76 RuPay Cards issued in mn 15.75 48.68 Deposits in `bn 56.09 Beneficiaries in mn 23.75 97.59

124.79 Central Bank of India 30.36 133.54

62.57 34.75 105.41

40.25 Oriental Bank of Commerce 39.53 47.25

189.91 Bank of India 58.09 216.58

104.51 80.50 130.30

918.53 State Bank of India 222.67 1,092.64

200.00 400.00 600.00 800.00 1000.00 1200.00

PMJDY - Top Private Banks as on 20 March 2019

4.66 RuPay Cards issued in mn Indusind Bank Ltd 0.35 4.92 Deposits in `bn Beneficiaries in mn 0.60 Ltd 0.47 2.11

7.65 Ltd 2.13 8.64

2.79 Ltd 2.19 5.07

ICICI Bank Ltd 2.45

13.45 Jammu & Kashmir Bank Ltd 6.86 15.94

23.16 HDFC Bank Ltd 9.80 23.17

5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00 50.00

Banking Frontiers April 2019 31 NBFC SBI, BoM & BoI lead Jan Dhan accounts in Maharashtra R. Vimala, CEO, Maharashtra State Rural Livelihoods Mission, speaks about bank linkage of Jan Dhan accounts and capacity building measures of SHGs in the state:

he model of Self-Help Group Bank of SHGs where all the important matters Linkage Program, or (SHG-BLP), - ‘Das (10) Sutra’ for SHGs are followed, Thas evolved as a cost-effective discussed and acted upon. The 10 sutras are: mechanism for providing financial services regular meeting; regular savings; regular to the unreached and underserved poor internal lending, regular repayment; households. The SHG-BLP operated regular book keeping; health, sanitation through state rural livelihood missions has and nutrition; enhance education; active proved to be useful channels for the credit participation in Panchayat raj institutions; delivery system with a wide acceptance by access to entitlements and sustainable banks, government departments and NGOs. livelihoods.” The Maharashtra State Rural Livelihoods Mission (MSRLM) was launched in July Cumulative Growth 2011 as a registered organization under There are 20.4 million Jan Dhan accounts the aegis of the National Rural Livelihoods in Maharashtra as on 6 February 2019 since Mission (NRLM) – Aajeevika. the inception of the Pradhan Mantri Jan The conceptualization and design Dhan Yojana in 2014. of the MSRLM goes beyond income The cumulative male accounts (12.26 generation activities and employment million) outnumber female accounts (11.82 programs to include capacity building, R. Vimala suggests that banks million) but the addition in female accounts financial inclusion, social mobilization and should look at women SHGs between 7 February 2018 and 6 February marketing services as equally important as good clients and support 2019 exceeds that of male accounts. Use of elements of livelihoods enhancement. RuPay cards as well as seeding of Aadhar MSRLM develops partnerships with major them with big ticket size loans have also increased. government programs, NGOs, CSOs (civil “It is observed that 2.13 million new JD society organizations) and also works with accounts have been opened in Maharashtra RBI, NABARD, banks and other financial Das Sutra For FI during the 12-month period ending on 6 institutions, insurance companies to bring MSRLM remains active in forming SHGs February 2019. Of this, new female accounts public-public, public-private and public- and giving all handholding support to are 1.63 million against male accounts of private-community partnerships to build women SHGs for their financial inclusion, only 0.79 million. Rural JD accounts have up key livelihoods sectors. livelihoods and coverage under social increased by 1.18 million to 100.17 million MSRLM makes efforts towards security schemes of . and urban JD accounts by 0.94 million to convergence with programs of a number It has its office at state, district and block 100.23 million,” says Vimala. of ministries including that of financial levels. It approaches SHG women through As many as 16.63 million RuPay services. community persons i.e. one of the women cards have been issued cumulatively in The activities of MSRLM include willing to work for society is selected from Maharashtra, of which 1.41 million have working for schemes and programs like among the village SHGs, she is assigned been issued in last one year. Around Atal Pension Yojna, Mahatma Gandhi to support all SHGs in the village, which 150, 000 accounts have come out of zero National Rural Employment Guarantee are normally 10 to 15 in any village. As balance, which is a good sign.” Scheme, Pradhan Mantri Jeevan Jyoti more SHGs are formed, then another CRP The top 3 districts in Maharashtra are Bima Yojana and Suraksha Bima Yojana, (community resource persons) is selected to Nashik (1.57 million), Thane (1.55 million) PMJDY, Gramin Post Jeevan Bima Yojana support the SHGs. and Pune (1.33 million) while the and etc. Nearly 3.8 million women belonging to Says R. Vimala, CEO of Maharashtra bottom three districts are Sindhudurg 354,389 SHGs in 26 intensive districts of State Rural Livelihoods Mission: “The (0.133 million), Wardha (0.235 million) Maharashtra have been mobilized so far. women identified thus attends the meeting and Gadchiroli (0.245 million).

32 Banking Frontiers April 2019 BOTTOM DISTRICTS Of the 3 bottom districts, Gadchiroli is one of the aspirational districts, where a special campaign was run by the central government in August 2018. Says Vimala: “Daily and weekly camps have been arranged for gaining 100% saturation where all bankers, collectors and our Mission staff have worked collectively for this purpose. In other districts also, our financial literacy CRPs and bank sakhis are taking literacy camps with LDM, FLCC. Officials from RBI and NABARD also attend the same. At present, we have 2285 bank sakhis and 1729 FLCRP which are supporting in 34 and 26 districts of the state, respectively.” MSRLM is identifying locations where banking branches are not sufficient. Vimala says MSRLM has so far identified Wardha, Gondia and Yavatmal districts and its team has selected around 35-40 locations at at 28 of these locations banking correspondents or banking sakhis have been appointed through SBI and Bank of India.

Top & Bottom Banks A women SHG at work As per the cumulative position of the Jan Dhan accounts, the top banks in sakhi’ and ‘Financial Literacy Community them with big ticket size loans, instead of Maharashtra are State Bank of India (7.49 Resource Person’ and BCs. They help giving them limited amounts. Also, past million accounts, deposits `10.35 billion), the community members for opening payment history of the SHGs should not (5.57 million, `13.41 of accounts and making transactions,” be given much weightage by the banks billion) and Bank of India (3.20 million, says Vimala. and banks should view afresh SHGs’ loan `9.21 billion). The bottom three banks are She says the branch network in the applications in better, improved current Punjab & Sind Bank (15,021 accounts), rural area is insufficient and the staff is version of the scheme.” Andhra Bank (50,128) and United Bank of insufficient. Besides, there are network [email protected] India (70,366). The aggregate deposits in issues resulting in customer not getting JD accounts of all the banks in the state as timely services. In some backward districts on 6 February 2019 is `53.03 billion. the population is scattered and even BCs Expanding YONO are finding it difficult to cover the wide area Capacity Building as it is not economical. Being a mission for women SHGs, MSRMS There are no specific targets for the has always been helping SHGs and its Jan Dhan scheme except that every left out members in opening bank accounts and villager should be given financial literacy undertaking programs for spreading to make him/her willing to open account Anuradha Rao financial literacy among them, especially in bank. So, each bank should cover the DMD & Chief about the benefits of having bank accounts, left-out members of family for opening of Digital Officer - SBI creating savings habits and subscribing to accounts. This is being done by MSRLM’s social security schemes. community resource persons. Summary: State Bank As part of the capacity building measures A majority of villagers are agriculture of India is expanding for SHG women, MSRLM is training them workers with very low incomes. Bank YONO to agriculture and creating awareness among them about transactions mean time and effort and and corporate sector. the benefit of having bank accounts. “We hence they prefer cash transactions. There will now be are supporting these women by giving Suggests Vimala: “Banks should look at YONO Agri and YONO Corporate. them opportunity to get selected as ‘bank women SHGs as good clients and support

Banking Frontiers April 2019 33 Research Notes - Discount Brokers Discount brokers continue to invest in new apps to grow ith the growing customer base of broking, currencies and commodities platform) and Streak (algo-creation, back Wdiscount brokers and the announced trading, mutual funds and bonds, is testing platform). Additionally ’s entry plan of Money, the low fixed operating on fixed operating costs of `1.2 new product plans include de-construction rate broking model is poised to grow billion and total operating costs of `2 billion of ULIP and selling term insurance and further. The largest discount brokers in (FY18). This is considerably lower than that direct mutual funds separately, launching the US - Schwab, Fidelity, TD Ameritrade of ISEC, which is operating at a total cost of investing platform for US equities, margin and Pershing - already control 62% of the `9.4 billion in FY18. HDFC Securities, the funding and direct retail investing in Indian broking market. It is expected that over second largest bank owned broker, is better government bonds. the next few years as the disruption picks placed in this respect as its total costs were For incumbents, capturing new clients pace, incumbents will be forced to reduce `2.5 billion in FY18. has increasingly become more difficult. This broking charges even for the cash product. Discount brokers continue to invest in will constrain their growth over a period Cost competitiveness will become a key. new apps - Zerodha has recently on-boarded of time. Incumbents will need to keep Zerodha, which is an Indian financial service Smallcase (index creating and investing investing in technology as new customers company that offers retail and institutional platform), Sensibull (option strategy trading are technologically savvy. Zerodha, 5 PAISA capturing equity broking market share arket share has been moving towards Active Customers (in ‘000): Trend For Top Players discount brokers. The equity broking M ICICI Securities Zerodha HDFC Securities industry in India is getting disrupted with Kotak Securities AXIS Securities Motilal Oswal Karvy SBI CAP Securities the rapid rise of discount brokers in general 1,000 in’000 and Zerodha in particular. Within just 5 900 887 years, Zerodha has clocked 15% volume 800 market share. It now has the largest active 700 600 541 customer base of 900,000. 500 5 PAISA, which is the second largest 400 discount broker, is at 2% cash volumes and 300 200 1.3% F&O volumes market share. It has 166 100 62 a customer base of 200,000 compared to 30 - 18 Zerodha’s 1.4 million. In certain segments FY14 FY15 FY16 FY17 FY18 FY19 Source: NSE handbook, HDFC sec Inst Research (BANK NIFTY options), Zerodha is hitting the maximum allowed market wide OI Currently the likes of 5 PAISA are still not The total number of direct equity (open interest) limit of 15%. very large in total customer accounts. ISEC investors is still quite low – about 15 million. This presents an opportunity for brokers and HDFC Securities currently serve 4.2 The immediate growth area is the mutual in general and more so for disruptors such million and 2.5 million clients respectively. fund investor who has not yet invested in as Paytm Money or any other discount With volume market share moving more direct equities i.e. 15 million. A smaller brokers as hitting of upper limit for towards discounters, the incumbents, over market means higher compulsion to keep certain derivative contracts indicates that the years, have responded by cutting pricing acquiring new customers and also increased opportunity exists for low cost capacity. mainly for the derivatives segment. competition for existing customers. New customers are white collared employees from IT hubs iscounters have been successful with the It has never spent any amount on its customers are white collared employees Dmillennial customer segment. Zerodha advertisement. Positive word of mouth has who trade the markets and are from the IT indicated that most of its customers are in worked phenomenally well for the company. hubs (particularly Bangalore and Pune). the 25-40 age bracket, while it has not been 5 PAISA too has a younger customer profile. Discounters have not been able to gain successful in gaining market share within The company indicated that a large number market share in the 40+ category as the the 40+ category. Zerodha’s 75% clients are of its customers are from tier 2 and tier 3 companies need to establish themselves as aged less than 35 years. It has positioned centers. This indicates that new set of brands and need to gain credibility among itself as a platform for first time investors / customers are savvy about trading costs and wealthy customers. Zerodha will target the traders (65-70% of net client additions last research before opening an account. 40+ segment over the next couple of years. year were first time investors). Zerodha also mentioned that several of [email protected]

34 Banking Frontiers April 2019 Presents

The financial sector has been on a continuous path of quick evolution since the introduction of computers in the 1980s. Dates: June & July 2019 V Evolution 1.0: ALPM, TBA, Branch Automation V Evolution 2.0: Core Banking V Evolution 3.0: Alternate Channels V Evolution 4.0: Total Digital Ecosystem

Evolution 4.0 is now making waves around the world. New technologies and advancements in existing technologies promise dramatic transformation in financial services. Such is the scale of disruption that regulators all around the world are now having to learn new things and seek ways to usher a smooth transition into the Locations: new digital ecosystem. Financial organizations that do not adapt to the emerging reality face the threat of extinction. V Lucknow V Jaipur V Bhopal

Program Schedule 09.00 - 09.30 hrs Registration, Tea, Coffee 09.30 - 09.35 hrs Welcome Address 09.35 - 10.00 hrs Keynote by Chief Guest: Emerging Regulatory Directions for Financial Services 10.00 - 10.15 hrs TEDx type Presentation: Digital Transformation – Achieve- ments & Lessons Despite being a heavily regulated space, the finance sector is now 10.15 - 11.00 hrs Panel Discussion: Digital Transformation for Universal the fertile playground for fintechs, insurtechs, risktechs, regtechs, Financial Inclusion wealthtechs and the like. Many of these players started as niche 11.00 - 11.15 hrs Tea, Coffee, Snacks players catering to narrow opportunities. Now however, many of 11.15 - 11.30 hrs TEDx type Presentation: Cyber Threats Scenario 2020 them are aiming to dramatically expand their horizons. Even bigtechs 11.30 - 11.45 hrs TEDx type Presentation: Recent Advances in Enterprise have jumped into the fray with the aim of disrupting the existing Cyber Security playground….the latest example being the launch of Apple Card. 11.45 - 12.00 hrs TEDx type Presentation: Recent Advances in Customer Authentication In light of these developments, Banking Frontiers is organizing 12.00 - 12.15 hrs TEDx type Presentation: Cyber Security as a Service – a series of conferences across the country to expose tier 2 and Pros & Cons tier 3 financial organizations to the new developments and to 12.15 - 12.30 hrs TEDx type Presentation: Mobile Vulnerabilities & Security empower them with the wisdom to achieve the right kind of digital 12.30 - 13.15 hrs Panel Discussion: Cyber Insurance - Scope & Coverage transformation. 13.15 - 14.15 hrs Lunch 14.15 - 15.15 hrs Panel Discussion: Strategies & Business Models to leverage New Technologies Audience: 15.15 - 16.00 hrs Panel Discussion: Radical HR Transformation for End-to-End Digital Ecosystem CEOs & CXOs of NBFCs, MFIs, HFCs, UCBs, DCCBs & RRBs. 16.00 - 16.15 hrs Results of Happiness Survey conducted in March-April 2019 Around 250 delegates representing 100-120 organizations are 16.15 - 16.20 hrs Vote of Thanks expected to participate in all three events combined. 16.20 - 16.45 hrs Tea & Coffee

Companies that provide IT products, IT services, Contact Us IT solutions, Digital solutions, Transformation Wilhelm Singh +91 - 773 838 7634 [email protected] consultancy, etc, are invited to leverage these Preshit Deshmukh +91 - 976 951 0035 [email protected] events to expand their business. Kailash Purohit +91 - 916 779 4613 [email protected] Research Notes - Malware MS Office can contain pseudoexecutable files ffice documents, like Excel Risky filetypes Ospreadsheets, may contain pseudoexecutable code, in the form of a File extension File type details Windows component Microsoft Office “macro,” or it may carry an .CHM Compiled HTML help HTML Help Executable (hh.exe) exploit against one or more known security .CMD Microsoft command file Shell vulnerabilities that affect Excel. A research .CPL Control PanelShell study by Sophos titled SophoLabs 2019 .DOTM Macro-enabled document template Word.exe Threat Report, reveal that while Office .HTA HTML application Windows Script Host (wscript.exe) .JAR Java applicationjava.exe documents have been at the center of attacks .JS Javascript Windows Script Host (wscript.exe) for several years, most of them require the .LNK Windows shortcutShell user to activate the macro scripting code .PIF Program Information File Shell embedded in the documents. Attackers .PS1 PowerShell script powershell.exe spent a considerable amount of effort to .SCFShell Command File Shell craft and refine documents that prompt .VBS Visual Basic Script Windows Script Host (wscript.exe) victims to take specific steps to disable .WSF Windows Script File Windows Script Host (wscript.exe) protections designed to thwart malicious macro scripts, finds the study, which also enough to guarantee that Office documents the Equation Editor, a component of Excel points out that even though the Office suite are rendered inert.” installed by default, can be invoked just by throws several cautionary prompts in the It cautions that criminals use special opening a spreadsheet, and subject you to user’s path, people can still be convinced to tools, called Builders, which know how to an infection. There’s no macro scripting that enable scripting or turn off ‘preview mode’ write the hostile exploit code or macro into needs to be enabled; The attack is already for Office documents that originated in an the document file. In the past 12 months, underway and finished often in less time internet download or an email attachment. Builder makers have made a shift away from than it took you to read this sentence,” the Says the study: “Some organizations older exploits, some of which had been in study emphasizes. or environments have been forced to use use for many years. It also says Microsoft was aware of these Group Policy objects to completely disable The report maintains that attackers vulnerabilities and published updates in the macro scripting components within have ramped up their use of novel exploits mid-2017 to various Office suite products to the Office suite and to render the settings against weaknesses in Excel and other prevent their exploitation, but not everyone not modifiable by users in order to prevent Office applications to deliver a broad range gets every update, and even if they do, some accidental or prompted execution of of malware types, such as ransomware or organizations delay the deployment of malicious macro scripts. But even that is not keyloggers. “A class of vulnerabilities in updates in order to perform tests. Malware apps can invade your mobile devices obile devices are increasingly becoming malicious apps do appear in the Google malicious campaigns affecting the Android Msubject to malicious activity and Play Market and Apple App Store,” it adds. platform as Phishing-in-the-app, which was malware apps are being pushed into phones, The study maintains that the Android marketed as bank account management tablets, or other devices running Android and platform has long been a more popular tools; Supply chain compromise, a iOS, points out the SophoLabs 2019 Threat target for malicious app-makers. The open Trojanized version of a legitimate app that Report. It says for some time malicious nature of the platform and low barriers had been included in the factory firmware versions of popular apps were predominantly to entry for developers has long been a from a small mobile phone manufacturer found at third-party app stores. “Conventional double-edged sword, making it easier to and shipped to customers on brand new wisdom (and in fact, our recommendation) is get apps built and functional. There are phones; Cryptominer code in games or to use the legitimate app stores, but even this Trojan apps that steal banking credentials utilities, which would run whether or not advice may not be enough to protect you from and passwords for other services, including the app itself was running, and functioned unwanted apps,” says the study. email, intercept and send SMS messages, as a constant drain on the phone’s (or other The study says although both Google exfiltrate the owner’s contact list and even device’s) battery. Cryptominers also put and Apple offer a closed ecosystem for cryptocurrency miners perversely disguised strain on processors by repeatedly running app distribution, and actively scan newly- as battery saving utilities (when, in fact, complex mathematical operations; and uploaded apps for snippets of code known running a cryptominer is the most battery- Advertising clickfraud embedded in apps, to be malicious, their methods are not consumptive thing you could do with a which are surprisingly, one of the most perfect. “Malicious app developers have phone), adds the study. profitable criminal enterprises right now. been gaming the system for years, and their The study identifies some of the unusual [email protected]

36 Banking Frontiers April 2019 Reading Habits Book-picks by bankers

Bankers are not confining to their subject matter when it comes to reading. Their choice of books is an indication:

ankers seem to be keeping abreast of happenings not just in the banking Brealm but gaining insight into matters of religion, philosophy, sports, technology and what not. They have a varied choice as indicated by their selection of books, which they have read or are currently reading or are in the process of acquiring. For instance, ‘Three Thousand Stitches’ by Sudha Murthy is a popular pick for many bankers. Similarly, Dr Raghuram Rajan’s ‘I Do What I Do’ too has a lot of pickers. There are also avid readers who have a variety of choices ranging from ‘The Undoing Project’ by Michael Lewis, ‘Thinking Fast and Slow’ by Daniel Kanheman, ‘Originals’ by Adam Grant, ‘Process Innovation’ by Thomas Davenport, and ‘Man’s Search for Meaning’ by Viktor Frank. Similarly, Sapiens by Yuval Noah Harrari and “The New Silk Roads’ by Peter Frankpan has attracted several bankers. And several of them are followers of sports, especially cricket, with ‘VVS Laxman 281 and Beyond’ being popular title. ‘Gandhi: The Years that Changed the World’ by Ramachandra Guha is again one of the titles that got some of the bankers hooked while there are also takers for ‘Skin in the Game’ by Nicolas Taleb, ‘The Master Algorithm’ by Pedro Domingos, ‘The Fintech Book’ by Wiley, while she proposes to get to read ‘Managing Change, Creativity & Innovation’ by Patrick Dawson and Constantine Andriopoulos. Some of the titles that are highly popular with bankers are:

Banking Frontiers April 2019 37 People Track New CEOs for IOB, Canara Bank Experian India has a new MD Karnam Sekar, who has been MD and Credit information CEO at the erstwhile and analytics has been company made MD and CEO of Experian India has . appointed Sathya He will assume office on Kalyanasundaram 1 July. Similarly, Rajesh as country managing director. Kumar Yaduvanshi, who was ED at Dena Bank has He will be responsible for driving R.A. Sankara Narayanan further growth of the overall India Ajay Vyas been appointed ED at Karnam Sekar . In operations of Experian with a the case of , its MD and CEO R.A. Sankara Narayanan has been appointed MD and focused vision on vertical market CEO of Canara Bank. His appointment takes immediate effect. The appointments were cleared strategy and strategic clients. by the Appointments Committee of the Cabinet. Experian India’s leadership team Another senior appointment is that of Ajay Vyas, who has been appointed ED at UCO will report to him to implement Bank. Vyas was field general manager at Central Bank of India. During his 26 years of service the organization’s business plans. at Central Bank of India, he held various positions in branches, zonal offices and FGM offices. He was CEO of MobME Wireless Solutions before he took up the M. R. Kumar is chairman of LIC assignment in Experian. He has over 20 years of experience in M.R. Kumar is the chairman of Life Insurance Corporation. His appointment has been announced by the government. Alongside Vipin consulting, finance and fintech Anand and T.C. Suseel Kumar have been made managing directors. leadership roles. He has also led An existing MD, Hemant Bhargava, has been functioning as interim the India operations of global chairman after V.K. Sharma had retired from the organization on 31 MNC Scientific Games and Texas December 2018. LIC’s executive board comprises of 1 chairman and 4 Instruments managing directors. Kumar was zonal manager, Delhi, Suseel Kumar zonal manager, Hyderabad and Vipin Anand zonal manager of the Parshuram Panda is CVC western zone. The interviews for the top positions in LIC was conducted for the first time by the Banks Board Bureau. at Central Bank of India Manian, Gaurang Shah to be directors at KMB Parshuram Panda has been appointed chief vigilance officer Kotak Mahindra Bank has appointed at Central Bank of India. He has KVS Manian and Gaurang Shah as whole-time been with Bank of India as general directors for a 3-year term. Manian is currently working as the president - Corporate, Investment manager in its central office. He Bank at the bank. Shah is the president and has extensive experience in retail, group chief risk officer of the bank. The rural and corporate banking and appointments have to be approved by the RBI and has also undertaken assignments the shareholders of the bank. for the bank overseas. He was earlier appointed chief vigilance KVS Manian Gaurang Shah officer at Dena Bank and now upon Tarun Rustagi CFO at CHSBCOBC Life Insurance its merger with Bank of Baroda, the government has moved him to Canara HSBC Oriental Bank of Commerce Life Insurance Co has Central Bank of India. appointed Tarun Rustagi as CFO Of the company. Rustagi has been heading the insurance finance team at HSBC Global Finance Center and has an extensive experience of over 20 years in finance and business strategy. He has held various leadership positions while working with life insurance organizations in India and overseas such as PNB MetLife, and AXA.

38 Banking Frontiers April 2019

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