NBFCs looking to technology to power their growth

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NBFCs looking to technology to power their growth

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The revised regulatory framework from the RBI seeks to address regulatory gaps while providing a level playing field for NBFCs and banks.


Over recent years, the NBFC sector has expanded sharply as witnessed by a credit growth at a CAGR of 24.3 % during 2007 -13 as against 21.4 % by the banking sector.


In most of these years, NBFCs grew faster than the banks However with stricter regulations, the increased cost of borrowing and NBFCs’ focus on niche markets, it is becoming more important for NBFCs to increase business agility.


Customer centricity is increasing vital and has become a focus area for NBFCs to differentiate. As reported in the Economic Times, Tata Capital Housing Finance is focusing on developing innovative products such as home loans which cater to low-income, urban customers in unorganized sectors. To support strategies such as these, NBFCs need business models powered by technologies that can design and launch tailored products very quickly.


As Mr. Samit Ghosh, Founder & Managing Director of Ujjivvan Financial services, said in Forbes recently “We have to develop new ways of doing this business. And one of the key ingredients to that is technology. Customers want simple products with easy access and efficient service. How do we provide to such a large number of people these attributes? For this, we need to bring in technology across all our services and product offering”.


NBFCs can power business expansion strategies by combining the advantages of the latest technologies with their focus on customers to create innovative products tailored to meet specific customer needs. Transforming into a ‘digital organization’ brings additional benefits, including real estate saving, manpower reductions and lowered administration costs. NBFCs (particularly the smaller ones) may not have a tech savvy customer base as of now but evidence from other parts of the world indicate that customers are adopting the latest technologies increasingly quickly.


Several new-age NBFCs such as Capital Float, NeoGrowth and Capital First, as well as online finance companies such as Lendingkart1 and loan facilitators such as SMEcorner2 are teaming up with SMEs/e-commerce players to offer sellers quick and hassle-free loans. These trends will also drive the need for NBFCs to transform into digital organizations.


As outlined in The Hindu, Magma Fincorp has embraced technology as a business-enabler — each of the company’s 2,000-odd sales personnel use a tablet to handle multiple loan products.


We see advances in the NBFC gold loan business with the launch of the innovative “online gold loans” product. Industry majors such as Muthoot are gearing up to introduce this product. The costs of running the business could be reduced by 25-50% through this innovative product.


As the level of competitive intensity continues to increase, and as new player emerge technology will be a major driving force. Nucleus Software has been a key player in the NBFC segment in India for many years. FinnOne Neo, our complete end to end loan management solution, enables business agility, allows customers to launch new products in a matter of minutes and matches the business requirements of NBFCs.


1 SMEs/e-commerce sellers can apply for a loan online and within a week loans are disbursed with flexibility of terms and repayment structure

2 An online platform that enables SMEs/e-commerce sellers to access loans easily from Banks and NBFCs

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About the Author

Arup Das, Vice President and Lending Product Head (P&L Management)

Mr. Arup Das is the Vice President and Lending Product Head (P&L Management) at Nucleus Software where he is responsible for taking the flagship product to the next level of global leadership. Before joining Nucleus, he held a variety of roles in strategy and product management with leading companies including CISCO, IPValue and Mphasis.

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About Nucleus

At Nucleus Software we are committed to providing efficient, modern yet proven software solutions for the global Banking and Financial Service industry. We have been pioneers in developing Retail Banking Software, Corporate Banking Solutions, Transaction Banking, Cash Management and Internet Banking Software since 1986. Our success spreads across more than 50 countries, and we serve our customers globally through our direct and partner operations across US, Europe, Asia-Pacific, Africa and the Middle East. We are known for our world-class expertise and innovation in lending and transaction banking technology. Our two flagship products, built on the latest technology are: FinnOne™ and FinnAxia™.