Mantras for a successful career in new-age Indian NBFCs

A recent report in a pink paper mentioned that non-banking finance companies (NBFCs) are witnessing an upsurge in demand and subsequently, are expanding their talent pool. According to this report, there exists a need for over 15,000 professionals in the industry, for FY20. Indian NBFCs are poised to be large-scale employers of finance professionals. However, the skills required to fruitfully handle (marginalized) customers of NBFCs differ from traditional approaches and temperaments, often not taught in B-schools or classrooms. It is my firm belief that these skills and approaches are vital to a successful career in this nascent, yet growth-oriented sector.

With a globalized economy trying to unlock India’s enormous consumer potential, ‘financial inclusion’ is the new buzzword in the Indian fiscal space. In 2014, the Indian government ushered a wave of change, by initiating the Jan Dhan Aadhaar Mobile movement. During a short span of four years, the total deposits in Jan Dhan accounts crossed a whopping INR 80,000-crore mark.

However, it is to be noted that although the number of adult bank account holders reached 80% in 2017, the average deposit in each account totals to around INR 1,100. These low-value bank balances pose their own challenges in the financial ecosystem. This is because Jan Dhan account holders, like drivers, cleaners, maids and vegetable vendors, belong to an urban yet informal economy. They cannot produce salary statements or have high CIBIL scores, to get their loans approved. Their induction into the formal economy is therefore a challenging task and a key propeller of growth, for NBFCs that target unorganised credit - retail, affordable housing and MSME-led businesses in particular.

While filling crucial positions across various roles, what skills must organisations focus on? What is the right skillset of those who shape the future of the sector? Here are my thoughts on the same –

 1.      Empathy-driven approach – Be it a sandwich vendor selling delicious snacks on the outskirts of Mumbai or a tailor with a small shop under the stairs in a housing society, it is necessary to understand such customers’ perspectives, ambitions and requirements from their own shoes. It is essential to deal with warmth, speak their language and be one among them, to be truly able to deal with such customer sets without overwhelming or intimidating them.

2.      Effective & Adaptive credit evaluation – Establishing credit worthiness of clients from the informal economy is a task that requires effective and adaptive means and tools. For a sandwich vendor, the employee can study how many loaves of bread, kilos of vegetables, and packs of butter are utilized, on an average. After establishing the expenses and the income generated through sales, the average monthly income can be computed. In addition, with documents like Aadhaar card linked to bank account and rising availability of affordable smartphones, customers have begun paying even small amounts through UPI, bank apps and digital wallets like Paytm. Therefore, traceability is better than ever before. This factor needs to be taken into consideration, during credit evaluation.  

3.      Tech-driven assessment tools – To establish a reasonable boundary for lending, NBFCs should tap into data streams that traditional creditors do not tap into. In this internet era, various tools that correlate data from multiple sources, such as psychometrics, mobile phone records and social media, can be utilized to assess credit worthiness. To utilize these modern tools, employees have to be tech savvy and understand the nuances of data analytics and risk management. This backend credit intelligence, when interspersed with branch-level evaluation, can create a prudent credit evaluation mechanism.

4.      Humanized recovery programs – High-handed recovery notices tend to do more harm than good. The loan recovery officers must employ a humanized approach to recovering loans. It is a good idea to visit the client in person, to understand why the dues are not being paid on time. If the cause of non-repayment is genuine, like an accident or an illness that is preventing the client from working and repaying the dues, care must to taken to extend the timelines. Past repayment data should act as the guidepost for such decisions. Employees must therefore be patient enough to design humanized recovery plans that take into account the client’s self-respect and honesty.  

To be successful in NBFCs, finance professionals need to have a ‘click and brick’ approach to work, whereby they use technology but also step out of their cabins and offices to genuinely know your customer (KYC) from the heart, with empathy, respect and conscientiousness .

The role of non-banking finance companies (NBFCs) is pivotal – both as a growth enabler and as a catalyst of economic inclusion. While large credit bureaus like Experian and Equifax furnish credit scores of loan applicants in developed countries, in India, unobtainability of data and availability of incomplete information pose challenges to the local players, like CRIF High Mark and CIBIL. The duty of NBFCs is, then, to leverage technology-driven tools to gather data and assess the risk of non-repayment. As traditional credit infrastructure cannot be utilized for this section of the society, the responsibility of underwriting and managing risk falls on the efficiency and approach of NBFCs and their employees.

Shedding away westernized credit scores and utilizing modern tools to establish an alternate, localized credit scoring system is therefore the need of the hour. Building a framework that nurtures such approaches is essential for the industry, during the phases of expansion and growth. As young professionals start switching careers and NBFCs become attractive professional and growth-driven avenues, employees need to address customer centricity in a humane and responsible manner. Bringing millions of urban Indians from the unorganised sector to the financial mainstream is no more a career option, but a mission for thousands to live by! 

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