Page 38 - Banking Finance August 2023

ARTICLE

costs, making it imperative for NBFCs to improve margins NBFCs need to build better communication strategies and
through cost optimization. Automation can help businesses identify smaller segments of people to whom a specific
scale up and optimize costs by reducing paperwork. NBFCs product, service or feature of a product could be vital.
can not only optimize cost across customer lifecycle
management, but also reduce the cost of customer 4) Managing IT infrastructure
acquisition by up to 30% by leveraging digital channels over
NBFCs with legacy systems struggle to bring down their
traditional ones. Effective use of IVR, chatbots, and other
capital expenditure due to the skyrocketing cost of
self-service channels also helps reduce cost.
managing IT infrastructure. Expenses on maintaining a
server, storage hardware, physical space, along with data
For example, a large NBFC recorded a 20-25% increase in
security software licenses constitute a substantial portion
the adoption of its payments platform by asking its field
of CAPEX and affect profitability.
collections agents to enroll and educate customers about
the application. The NBFC immediately saw an increase in
Cloud-based technology such as CCaaS (Contact Centre as a
field agent productivity and a reduction in CTC by 10-15%.
Service)can substantially reduce infrastructure costs while
elevating the customer experience.
3) Understanding evolving customer expecta-
tions So, there is an increasing necessity to move from legacy
technologies to cloud solutions. If done with right planning
Misalignment in product offerings with customer needs is
& factoring in contingencies, transition to cloud can happen
another key challenge faced by NBFCs. Over 91% of people
smoothly with minimal efforts and bottlenecks.
unsubscribe from emails, 44% of direct emails go unopened
and 60% opt out of mobile notifications, to avoid a glut of
irrelevant messages. This makes micro-segmentation more 5) Data Privacy
crucial than ever. Financial services have always been the top target of
cybercriminals. Particularly post pandemic, the dependence
As they are flooded with choice, customers only focus on on digital channels has increased manifold. Hackers have
products or services that are most suited to their needs. This multiple entry points to steal sensitive information and
makes micro-segmentation more crucial than ever. compromise systems. Hence, it has become imperative for
Integrating your customer communications platform with lenders to build tight information security controls. Cloud
your CRM software can help you deliver personalized technology not only brings down the cost of overall
engagement at scale. operations but also provides an extra layer of security when
incorporated into the system.

Despite covid-led disruptions, NBFCs have emerged stronger
with the space leading the fray in retail lending. In FY2021,
NBFCs disbursed 12 crores of loans and registered a 64%
growth from the previous fiscal.

Technology has made round-the-clock connectivity a reality
and enabled NBFCs to develop a deeper understanding of
customer behaviour. However, with the emergence of new
players in the retail lending space, NBFCs will need to
reinvent their operational capabilities and rethink their
customer outreach strategies.Considering the multitude of
players in the financial sector, the new generation of
consumers is spoilt for choice. Switching brands is just a click
away. The key differentiator here is the customer
experience.

38 | 2023 | AUGUST | BANKING FINANCE