In this age of instant gratification, customers want to be in the driving seat of their retail loan journey as the expectations and demands have changed with the emergence of digital and mobile-based applications. Today, a customer does not wait for the bank branch to do a funds transfer, as it can be done through the 24X7 funds transfer facility available through mobile banking applications. Also, when we buy a product online, we expect same standards and quality at a better pricing than the retail store next door, else we just return the product with no questions asked.
Similar is the case when a customer approaches banks for a retail loan. He expects the bank to deliver the loan with minimum documentation and without any delay. Gone are the days when one would visit the branch multiple times to get a loan. Today, the customer, especially an existing one, expects the bank to know more about her and her needs, and hence approach her in a refined manner, maybe with a pre-approved loan offer and minimum documentation.
So, the trend we see is a migration towards a complete digital process that is smooth and hassle-free. Bank of Baroda has created a centre of excellence where it is building a complete digital process for sanction of loans. It also plans to partner with a few fintech companies that have built many solutions, and crunch the timeline to process a loan without compromising on the framework the regulators want us to follow. For example, to verify income statements submitted by the customer, there is a manual process that takes 2-3 days to get the result. The same can be done digitally in a matter of seconds, and such solutions will now help deliver superior customer experience.
Another major trend we see is the use of analytics to know the customer better and address her needs and to build a quality lending model. We know the importance of data and what it can mean for different departments. For marketing, it can bring in customer insights and conversation data across multiple channels. From a business intelligence perspective, it can be used for portfolio analytics, risk modelling and prediction of risk in a portfolio. Bank of Baroda has another centre of excellence for data analytics, which is putting in various models to work on all the aspects to bring in efficiency, more profitability and a focused approach in sale of products to customers with greater insight through data analytics.
One more major trend we see is the use of artificial intelligence (AI) and machine learning (ML) to deliver smooth processes. In this space, Bank of Baroda is discussing with fintech players to move some of the monotonous processes to AI driven by ML. Allocation of a valuation can be initiated through the AI engine, based on some data analytics parameters set in the engine. For example, data of the last two years show that some valuers have better timelines for submission of reports or have submitted quality reports. This helps us in having a system where no individual can decide who will do a particular valuation, thus reducing risks.
Another trend that we are witnessing is technological upgrade of the legacy systems that cannot integrate into the new generation systems architecture. Bank of Baroda has replaced the legacy systems that did not have technological capabilities of integrating with various fintech solutions.
Omni-channel presence is another important trend. Traditionally, the retail loan products were sold only through bank branches. Today, a retail loan player needs to be present across all important channels that can be a potential touchpoint for the customer. Hence, a digital or a branch driven strategy alone will not work. Bank of Baroda has built teams to engage with corporates, government bodies, public sector undertakings, builders, car dealers, education institutes, overseas career consultants, direct selling agents and digital channels to market products. As the customer looks at the convenience of the service delivery, the digital channels have an edge. The face-to-face interaction and physical delivery will remain high in products like home loans, but will be very low in products like personal loans.
Banking and financial institutions are gradually moving from being product-based delivery channels to a seamless mobile platform where all products can be purchased or serviced. The fintech disruption in banking and financial services seems to be the next big change after 'Uberisation' and 'Amazonisation'. Blockchain technology might be the next big thing to deliver superior process through non-traditional channels. But with banking being a highly regulated business, all this systematic changes will start with the regulator adapting and indicating the need for adoption.
Sethi is head, mortgages and other retail assets, Bank of Baroda.