Mobile Solutions to accelerate Financial Inclusion : Microfinance is an industry that bridges the gap of economic inequality by lending loans to the unbanked/underbanked that benefit them in building their assets, creating new business opportunities and having a sustainable lifestyle. Being a guardian angel of the economically challenged, Microfinance fosters financial inclusion to alleviate poverty in India.

Furthermore, Internet and mobile penetration has led to the evolution of technology in the microfinance sector. However, the limited financial proficiency and formal training in rural India poses specific challenges in Microfinance operations. With the new RBI guidelines, technology (Mobility Solutions) now plays a major role in scalability, acquiring the increased target market and gaining competitive advantage through customized solutions.

Digitization in the microfinance sector gave birth to mobility solutions that contribute to the accomplishment of financial inclusion.

 

Mobile solutions bring many stumbling blocks at ease. It reduces the operational costs by collecting data entirely through mobile devices, builds customer loyalty though better user experiences, empowers microfinance industries to reach out to more people and function in a uniform and organized manner.

Accelerates access of financial services in remote areas, understanding customers’ needs and behavior and upskilling people of rural India.

Craft silicon ~ Fulfilling the vision of financial inclusion  

we bring you the array of mobile solutions to combat all the challenges of field operations and expedite the aim of financial inclusion. These solutions help in improved decision making, reduction of default rates and expenses, thereby bridging the communication gap to enhance productivity.

Let’s explore craft silicon product suite that is created to envelop the entire microlending process from loan management to disbursement, collection, and delinquency management.    

GLOW

Abbreviates to group loan organization flow is a comprehensive software that has various inbuilt features that are beneficial to MFIs. Starting with village surveys, geo-location tagging, capturing demographics data and eKYC,  it enables automated field credit verification and appraisals, centralized data management, quality check for easy loan disbursements.

ILOS

Individual loan origination workflow automates the lending process by allowing the lenders to promote loan products through geo-tagging feature, seamless data entries, reference checks and loan utilisation plans.

TRUCELL

Trucell is a mobile application specifically designed to support and empower Microfinance field operations. It facilitates the lending operations for optimum loan collection, loan disbursement, Loan Utilisation payments, pre-closure, demise marking and other e-services through mobile devices. Trucell hosts a range of functions and activities to make work easier, quicker, and efficient for field officers.

TRACKOD

TrackOD supports in managing default accounts, overdue loans, partial collection, fore-closure, on-field loan settlement and write off recommendations digitally.

CUSTOMERAPP

Customer app helps the end borrowers by providing a user-friendly interface for MFIs customers that facilitates access to loan information, loan status alerts, new offers etc. in their regional language settings.

Craft silicon provides integrated low-cost digital tech mobility tools to lenders and borrowers and thereby, accelerate the growth of financial inclusion in India. This mobile initiative will fathom a lot of interrelated issues like literacy and unemployment, thus curbing poverty on a large scale!

Author: Divya Jyothi   |  UX & Marketing Manager

Divya is a goal driven Marketing and Product design professional with over 7 years of corporate experience. She oversees end-to-end marketing management by developing and executing integrated marketing strategies to advance sales and customer engagement. Functioned as a Meticulous product designer balancing multiple deadlines while maintaining an organized yet, creative approach towards user research, product interaction design, UX & UI design.

Paperless e-KYC (Know Your Customer) is presented by UIDAI to enforce inclusion, privacy & security. It will allow Aadhaar number holders to voluntarily utilize their cards to confirm their identification in a paperless and digital manner.

RBI has decided to invite applications from NBFCs, Payment System Providers and Payment System Participants to obtain digital Aadhaar authentication. Banks & Financial Institutions with licenses are adopting the data security measures for Aadhar Vault to enable e-KYC integration and seamless data verification.

Craft Silicon has recently tied up with Karza technologies to offer e-KYC services to the small finance banks and their BCs. It aims to offer seamless integration and real-time data verification.

The offline e-KYC approach allows Aadhaar cardholders to provide their KYC data for authentication quickly and simply. The KYC details are in an XML format. One can easily download an XML file version of their KYC information as an Aadhaar cardholder and give it to the requesting service providers or organizations. The UIDAI substantiates the XML file, which is a tamper-proof document, and it is signed electronically, adding to the security of the data being transmitted. The agencies can additionally verify the user’s identity by utilizing their own OTP or facial authentication.

Key Benefits of adopting e-KYC                                                                                                               

 ●    Cost Reduction

 E-KYC significantly lowers the cost of paper-based verification and KYC as it reduces the paper expenses that are avoided immediately, and the resources required to maintain it, like people, inventory, storage, etc resulting in massive cost-cutting.

●    Privacy

Privacy is addressed under E-KYC as the Aadhaar number of the customer is not disclosed, only a reference ID is shared. Moreover, core biometrics (fingerprints or iris) are not required for such verification. The Aadhaar number holder gets a choice of the data (among the demographics data and photo) to be shared giving the control in the hand of the customer.

●    Security

UIDAI digitally signs Aadhar KYC data to ensure its validity and detect any manipulation. Agencies can also use their OTP/Face Authentication to verify the data. Residents have control over their data since KYC data is encrypted using the phrase given by the Aadhaar number bearer.

●    Inclusion

According to the Signicat report (2020), 40% of consumers abandon the banking onboarding process in between because of the time required to complete the steps, or the need to reveal excessive personal information. E-KYC helps to reduce the time and will resolve the issue of privacy as it is voluntary and Aadhaar number holder driven.

Process                                                                                                                                                                                 

1. Aadhar card is given to the bank officer who takes a note of the Aadhaar number
2. Authentication is done through a fingerprint or image of the retina. Otherwise, one-time password ( OTP ) based authentication can be done.
3. The value is transferred to the UIDAI using secure servers as soon as the instrument reads the biometric data. The input biometric data is matched against the value stored in the central database for that specific Aadhaar number.
4. Following successful verification, the UIDAI will notify the corresponding bank or agency of all credentials, such as addresses, dates of birth, pictures, and so on, effectively eliminating the need to carry multiple needless papers.

The UIDAI allows an agent or an organization to maintain a digital or soft copy of all relevant information on their remote server, giving them the flexibility to utilize them as and when they are needed.

Way to access e-KYC

Any person who has their Aadhaar card will be able to easily access their e-KYC data by following steps:

 ● Visit: https://uidai.gov.in/

● Download the Paperless Offline e-KYC form

● The next step will be to fill up the form carefully and submit the same

● The applicable information will be available for downloading the same as an XML file that will be digitally signed by the appropriate authority of UIDA

Data covered in offline e-KYC

 

Service providers or agencies will be able to authenticate the details. Let us see what details they will be able to see while downloading or getting offline e-KYC data included in the XML.

• Name of the Resident
• Download the Reference Number
• Address
• Photo
• Date of Birth or Year of Birth
• Gender
• Mobile Number in hashed form
• Email Address in hashed form

The Aadhaar Offline e-KYC data is encoded using a “Share Phrase” granted by the Aadhaar holder at the time of download, which must be shared with service providers or agencies for them to access a person’s KYC data or user information.

Ways to share Aadhaar Paperless Offline e-KYC Data                                                                                     

Data can be shared with the verifying agency by the Aadhaar number holder in digital or physical format along with a shared phrase.

● Digital Format: XML/PDF

○ Preferred when a high-quality photo is required

● Printed Format: QR code

○ When the resident is more comfortable with a physically printed format

○ Low-resolution photo for visual inspection only

Currently, all the financial institutions and banks are undergoing a significant digitization phase. Digital transformation has been a component of the most impactful organizational developments in the recent decade, of which e-KYC is a part.

Companies must adopt electronic identification processes with high levels of safety and reliability and follow the guidelines outlined in AML5 or eIDAS laws to guarantee that e-KYC methods match the same safety standards as traditional identification and face verification.

About Craft Silicon

Craft Silicon is a leading financial technology solution provider and recognized as one of the most tech-savvy software groups globally. Craft Silicon supports 300+ financial Institutions by delivering value in over 30 countries.  Craft Silicon provides robust solutions that include Core Banking, Loan Management, Channel Banking etc. –  Managing over $7.4Bn of Loan Portfolio, 77Mn customers & 2Bn transactions per year in Asia region.

 

Author: Divya Jyothi   |   Assistant Marketing Manager

Divya is a goal driven Marketing and Product design professional with over 6 years of corporate experience. She oversees end-to-end marketing management by developing and executing integrated marketing strategies to advance sales and customer engagement. Functioned as a Meticulous product designer balancing multiple deadlines while maintaining an organized yet, creative approach towards user research, product interaction design, UX & UI design.

Author: Udit Divyanshu   | Business Development

Udit is an upbeat person and finance enthusiast with an MBA from IIM Ranchi. He has an inquisitive outlook towards the finance domain and core competencies lies in financial modeling, product demonstrations and customer engagement. His passion lies in helping people understand complex concepts and bringing about constructive change.

Data is the new oil and data-driven insights are the helping hand of modern-day businesses. Financial services are no exception, robust development in technology, new entrants, mobile phone penetration are redefining the whole landscape.

Microfinance sector amounts to a huge number of client accounts and is the center for unstructured, web and big data.

This data set contains customer details including age, income, expenses, loan purpose, occupation, attendance at meeting centers, etc leading to the increased demand for analytics to extract actionable insights.

Let’s understand the types of analytics currently being offered by the industry

Geospatial Analytics

Demographic data of the customers of a particular area or region helps to map them with viable products. This data helps to target potential customers residing in that area or region. This requirement is fulfilled by Geospatial analytics.

It helps to display customers’ location on a map of the MFI branch. Moreover, it forecasts the human population by filtering out relevant data and applying it to provide trend analysis, modeling and predictions. It analyzes and monitors the performance of the MFI branches and reviews by defining a trade area and figuring out nearby competitors.

Behavioral Analytics

It plays a vital role in determining behavioral patterns to identify whether the customer is likely to default. Accurate collection models can be a driving factor behind a product’s collection rate and efficiency. Simple classification models or scorecards can be developed on the past data to assist the collection team to pin down the group of customers in the current portfolio who exhibit a similar pattern to the ones who defaulted earlier.

The collection team can focus more on the customers with a high probability of default and align their efforts accordingly to reduce the delinquencies. This model runs at the beginning of every collection cycle, and it’s frequency will be the same as the repayment frequency (weekly, monthly or fortnightly).

Predictive Analytics

Predictive analytics delivers capabilities to mine insight from historical data and optimize solutions to reduce variability and improve operations.

It helps MFIs to reduce costs by converting raw data into business insights for better decision-making. It enables combining data across industrial sources and quickly discovering problems, identifying fundamental reasons, and determining future performance.

MFIs are using it to make better decisions for continual improvement of quality, productivity, and operations delivery. Branch-wise data is churned to determine the performance of each branch, and the executives take corrective measures to fix the laggards.

It can pinpoint the root cause of low performance and suggest the required course of action well in advance.

 

Predictive Analytics

 

Dashboard and Scorecard

Dashboards offer a bird’ eye view of KPIs (Key Performance Indicators) relevant to the MFI business process through constructive use of visual charts and graphs.

Analytical reporting is the most important element in presenting the desired information in different forms to the top management. This tool enables multi-dimensional analysis, what-if analysis, and data drill-down analysis.

A scorecard helps to measure and monitor the KPIs concerning the defined strategic goals and performance milestones, through effective use of traffic light indicators.

The comprehensive console provides exhaustive details to top management helping them understand trends, patterns in their business growth. With this console, executives can track, decide, and on various aspects of the business for eg. detailed analytics of expenses and revenue that helps to determine the level and cause for change in ROE

Dashboard and Scorecard

 

Customer Analytics

MFIs use analytics to identify the profitable customers who could also become target customers for other products and individual loans.

Customer Lifetime Value or CLTV is a measure used for calculating the value of a customer relationship, based on the NPV or Net Present Value of the projected future cash flows from the customer. Those with negative NPV should not be considered in this respect while consistent effort should be made to improve recoveries from such customers. Profitability and the lifetime value of the customers facilitate comparison with peer groups and indicate customer sentiment and the probability of attrition.

Analytics can also assist to determine a customer’s SOW or Share of the Wallet, which is the amount of the customer’s total spending on the products and services offered by the MFI. SOW can be enhanced by up selling and cross-selling other products or services thereby creating loyalty.

Conclusion

Through the assistance of predictive analytics and profitability-based customer analytics, MFIs can improve the quality of loans and reduce delinquencies. Moreover, mobile and cloud-Based analytics enable access from anywhere on any mobile device to the senior executives of the organization.

Big Data will help the Microfinance industry to reach a milestone where they will have the facility to provide products that customers exactly need. MFIs will be capable of serving customers with just-in-time financial needs, with the best-suited loan ticket size and insurance schemes.

As the famous saying goes “work smart don’t work hard”. Big data works on the same mechanism to structure the unstructured data and deliver useful insights.

About Craft Silicon

Craft Silicon is a leading financial technology solution provider and recognized as one of the most tech-savvy software groups globally. Craft Silicon supports 300+ financial Institutions by delivering value in over 30 countries.  Craft Silicon provides robust solutions that include Core Banking, Loan Management, Channel Banking etc. –   Managing over $5.6Bn of Loan Portfolio, 57Mn customers & 1Bn transactions per year in Asia region.

BR Analytics –

BR Analytics, using inbuilt deep domain knowledge, provides analytical solutions to improve business decisions & optimize performance. An intuitive system, it allows for interactive /visualizations of business insights & predictive analytics capabilities, converting raw data to actionable insights –

• Reads multiple sources – big data, web data & unstructured data
• Convenient plug & play system with core BR.NET allowing quick deployment
• Real-time data analytics for business insights across industries
• Detailed reporting includes KPIs, dashboards

Author: Divya Jyothi   |   Assistant Marketing Manager

Divya is a goal driven Marketing and Product design professional with over 6 years of corporate experience. She oversees end-to-end marketing management by developing and executing integrated marketing strategies to advance sales and customer engagement. Functioned as a Meticulous product designer balancing multiple deadlines while maintaining an organized yet, creative approach towards user research, product interaction design, UX & UI design.

Author: Udit Divyanshu   | Business Development

Udit is an upbeat person and finance enthusiast with an MBA from IIM Ranchi. He has an inquisitive outlook towards the finance domain and core competencies lies in financial modeling, product demonstrations and customer engagement. His passion lies in helping people understand complex concepts and bringing about constructive change.

India witnessed a shift in the microlending landscape in the last decade. Approx. 60 million women across the nation have a massive outstanding loan portfolio of INR 2,59,377 crore in March 2021, says a report (Micrometer by MFIN) .

To meet the evolving consumer demands, the industry has transformed their entire lending process which includes a faster, secured, scalable and streamlined borrowing experience to the end customers. Increase in mobile penetration across rural markets has paved the path for digital emergence. The major factors which have led to a spur in growth are – increased digital connectivity and innovation.

Tech driven solutions are disrupting microfinance lending from loan origination to disbursement. Digitized loan origination automates and manages every step of the lending cycle such as loan application, documentation, verification, credit bureau check etc. It speeds up processing and approval of loans faster. It further streamlines lending operations and minimizes the credit risk with business rules & CB report.

Tech driven solutions are disrupting microfinance lending from loan origination to disbursement. Digitized loan origination automates and manages every step of the lending cycle such as loan application, documentation, verification, credit bureau check etc. It speeds up processing and approval of loans faster. It further streamlines lending operations and minimizes the credit risk with business rules & CB report.

Amidst the thrive of microfinance institutions, Group Loan Origination used to be a cumbersome and document intensive process by which a borrower applies for the loan. Nowadays, with the increased use of automation & digitization this process is becoming easy and quick.

Let’s understand the whole process of loan origination in a brief manner.

Loan Origination Process

Village Survey

It is conducted to extract the basic information of the village like population structure, business activity, financial dependencies, social dynamics, law, and order scenario etc. It is used to assess the viability of the residents of the village from a bird’s eye view to begin with the credit operations.

Lead Generation

It refers to the action of identifying the potential clients through village surveys and briefing them about the company and its products. It helps to stimulate the interest of the borrowers and increase their awareness about the loan product.

Pre-Qualification

It helps to check the eligibility and authenticity of the borrower for a particular loan product. Borrowers must provide ID and other documents to establish their eligibility. Following documents are demanded by the lenders

• Voter Id or Aadhar card
• Address Proof
• Bank Account details
• Consent for e-KYC with biometrics or OTP

These documents are verified by the lender and the credit score of the borrower is also checked. Once the screening out of ineligible candidates is done the borrowers are allowed to proceed with the loan application.

Loan Application

Borrower provides all the relevant information in a detailed manner to the officer. The application is intensive and requires all the information like financial history, monthly income and expenses, bank account, insurance, loan purpose etc.

Loan Underwriting

It is a due diligence process where the lender does deep scrutiny of the applications and the Credit Bureau report can be reviewed, if required, to check the authenticity of the details provided by the borrower. Applications are sent back for correction if any error is found at this stage.

Customer Onboarding

Finally, the customer receives the decision on approval of their loan application and a loan card is provided to them. Within 7 days of onboarding the disbursement is done in the customer’s bank account.

Traditionally, loan origination was an intensive, time-consuming and complicated process as it involved manual underwriting and paperwork which is where digitization offers the chance to deliver rapid and responsive services to the borrowers in a manner that has never been done earlier.

Benefits of Digitization

Reduced TAT (Turnaround time)

It promoted speed and efficiency as the verification process can be done digitally through eKYC, Video KYC, eSign, etc. therefore, reducing the turnaround time by almost 50 %.

Increased Scalability

Robust technology helps to scale up the business operations in a swift manner. It takes less time for the whole process, so more customers can be onboarded as data and ID images are available across the organization to scrutinize it

Lower Cost

Digital software streamline the operations and result in more accuracy thereby reducing the cost per transaction. Features like integration with credit bureaus and other third parties, automated reporting to the branch helps in making the right decision that saves on cost.

Enhanced Accountability

Digital sourcing, data driven processes and the correct use of tech-enabled services have helped to reduce human intervention making the processes more accountable and accurate. It becomes easier to mold the process according to the dynamic regulatory environment.

Robust Analytics

Analytics helps financial firms to yield instant, automating the KPIs (Key Performance Indicators) of the business operations. It offers flexible features like highly customizable applications, and extensive third-party integrations. Moreover, predictive analytics are transforming the industry while inducing decisive promptness.

Road Ahead

Educating Customers

Low digital and financial literacy of the customers poses a challenge for the MFIs, it requires customer education and spreading awareness to build trust and establish reliability.

Digital Adoption

MFIs handle employees and business correspondent partners with limited formal education and financial training of the field staff. This limited understanding of the banking infrastructure and digital services available leads to limited adoption in the ecosystem.

Advanced Data Security

Ensuring a secure and encrypted database for storing personal data is essential. Data protection and cybersecurity is of utmost concern for a successful digital adoption while ensuring business continuity.

Self-Onboarding 

Having acknowledged the requirements of today’s customers, MFIs are transforming their processes to offer an experience that is comfortable and easily accessible. The whole process of onboarding is completely digitized, and customers do not require to go to an office or branch. Documentation is done through APIs and video KYC helps in real-time customer verification. It is possible with the advent of the digital onboarding to apply for a loan remotely with the same security and trust.

Digital loan origination will ensure streamlining of operations and ease of entering data quickly for the field officers. It will be cost effective and add value across the chain to make a considerable impact.

MFIs success depends on their ability and agility to adapt to the digital services for loan origination and management. MFIs are embracing digital transformation by harnessing the potential of their business network and partnering with fintechs to deliver personalized, digitally enabled services.

About Craft Silicon

Craft Silicon is a leading financial technology solution provider and recognized as one of the most tech-savvy software groups globally. Craft Silicon supports 300+ financial Institutions by delivering value in over 30 countries.  Craft Silicon provides robust solutions that include Core Banking, Loan Management, Channel Banking etc. –   Managing over $5.6Bn of Loan Portfolio, 57Mn customers & 1Bn transactions per year in Asia region.

GLOW – Group Loan Origination Workflow is a customized software with capability to capture the entire loan portfolio data in one place from the initial village survey, loan origination and to the final disbursal stage. It has Comprehensive loan tracking mechanism from origination to disbursement

• Digital KYC
• Centralized data management
• Real-time access with authorization controls

Trucell – Field Operations made easy –  A mobile application specifically designed to support and empower Microfinance field operations. Key modules include Loan Collection, Loan Disbursement, Loan Utilization, Fees Collection and Repeat Loan Processing.  Trucell hosts a range of functions and activities to make work easier, quicker, and efficient for field officers.

Author: Divya Jyothi   |   Assistant Marketing Manager

Divya is a goal driven Marketing and Product design professional with over 6 years of corporate experience. She oversees end-to-end marketing management by developing and executing integrated marketing strategies to advance sales and customer engagement. Functioned as a Meticulous product designer balancing multiple deadlines while maintaining an organized yet, creative approach towards user research, product interaction design, UX & UI design.

Author: Udit Divyanshu   |  Business Development

Udit is an upbeat person and finance enthusiast with an MBA from IIM Ranchi. He has an inquisitive outlook towards the finance domain and core competencies lies in financial modeling, product demonstrations and customer engagement. His passion lies in helping people understand complex concepts and bringing about constructive change.