IT INNOVATIONS AND THE FUTURE OF BUSINESS – V.P. NANDAKUMAR
On 17 January, Manappuram Finance was in the news when we were awarded the prestigious KMA NASSCOM IT Innovation Award at the annual convention of the Kerala Management Association, in Kochi. The announcement was a fitting acknowledgement of the cutting-edge work our IT department has been doing in recent days. So far, much of the activity was behind the scenes, but now that NASSCOM has recognized our efforts, the time has come to take off the wraps.
It is a fact that Information Technology (IT) has always been a key strength of the company. Our investment in IT was an important reason we could grow so rapidly during our high growth phase from 2007 to 2012 when our gold loan portfolio shot up from Rs. 400 crores to touch Rs. 12,000 crores. In fact we were among the first NBFCs to build and operate an IT system based on centrally managed applications. Today, all of our 3200 branches operate online with direct access to the centrally hosted applications. However, there can be no resting on laurels and it goes without saying that our drive for innovations in the IT space will continue with our quest to emerge as one of the leading financial institutions in India. Indeed, technology has become even more important today as we diversify into areas like home finance, vehicle loans, loan against property, microfinance etc.
The KMA NASSCOM IT Innovation Award recognised our innovative work in two key areas that I’d like to share with you today.
Automatic Intrusion Alert Management System (AIAMS)
AIAMS is a state of the art centralised surveillance system to reinforce the security of the gold stored at our branches. The system works through sensors located at the branches that are designed to detect attempts at intrusion. The idea behind the system is that if someone tries to break open a branch and get into a vault, it will take him at least one hour to cut through the vault and get to the gold. With a reactive system that would swing into action within this one-hour window, potential burglars would be deterred from targeting Manappuram’s branches.
Highly sensitive intrusion alert sensors like contact sensors, IR-based proximity sensors, and vibration sensors are installed at various points of entry within the branches. The networked system picks up signals from the sensors and throws an alert at our central monitoring station. The security staff on duty can then view a video stream directly from the cameras located at the target branch. What is more, the system automatically generates alerts to the security agencies based near the branch site, enabling them to respond promptly. The alerts are delivered through three separate modes—SMS, eMail and Auto Phone call—to make it fail-proof. Recipients of the email alert can click on a link within the mail that takes them directly to a video stream of the incident as it unfolds. In this way, they can orchestrate a quick and effective response to the situation.
Apart from deterring burglary and other security mishaps, AIAMS has the potential to replace many of our night-time security guards. Indeed, once the system is rolled out fully, our estimate is that the company would save around Rs 100 Crores over the next three years. Having started out in November last year, we have already covered over 1000 branches. And within the next few months, AIAMS will be implemented at all our branches in India, even in remote places like Andaman and Nicobar Islands. We would then become the only NBFC in India to have adopted this state of the art technology, in an integrated and centralised configuration, managed completely by the internal security team of the company.
Next Gen gold loan business based on eLockers:
Manappuram is currently investing in an R&D project for the development of IoT (Internet of Things) based keyless, fully automated eLockers that will be managed completely through encrypted IT protocols. In fact, using cutting edge M2M (Machine to Machine) communications protocol, not only routine functions like opening and closing of the eLockers but even auditing, remote monitoring etc. of the gold stored inside will be managed through centrally controlled IT systems. The idea is revolutionary and can potentially transform the gold loan business, for instance, by shrinking the size of many of our current branches to a small kiosk. These kiosks, of the size of a typical ATM kiosk, would come with built-in eLockers and would reduce operating expenses substantially. Over time, it will enable us to open more outlets at places where people have immediate need for a gold loan, like hospitals, trading centres etc.
The eLocker technology would also make it feasible for us to offer Gold Deposit Services where our customers deposit their gold jewellery with us for safekeeping even when they have no immediate requirement of a gold loan. For this purpose, we may provide a secure, hi-tech and well guarded facility within each town or city. This facility will contain an array of eLockers within a strong room and a separate hall with multiple customer facing counters, as in any bank. However, unlike bank lockers, the customers will also be entitled to a receipt for the gold deposited with us. Further, as a value added service, the depositor may be allowed to view his stored gold anytime online, through remote IR cameras placed inside the lockers.
When eLockers are considered together with our recently deployed online payment systems, many of our customers may not have to visit a branch thereafter, be it for taking a loan, for payment of interest, or for closing the loan. Gold loan operations can then be carried out almost completely online, in the way banks these days handle personal loans. We could even consider reducing the number of physical branches and instead handle higher business volumes online.
In addition to the above projects, we have recently implemented a host of other technology initiatives that are well worth a mention. Our “Online Payment Portal” is used by customers to pay interest, principle, or make any other remittance to the company. It is available in both PC/Laptop as well as mobile phone based versions. We have implemented the “IMPS Payment System” to allow instantaneous and 24/7 online transfer of loan proceeds to our customers. In the coming days, it will completely replace cash transactions with customers with a bank account. With the launch of our “Domestic Money Transfer” platform, funds can be remitted across India in a matter of minutes. Our Call Centre is now ready to handle customer queries and settle grievances proactively. Internally, we have implemented an Intranet and Social Networking platform that allows various departments to maintain their own informative websites while the social networking platform is like having our own private Facebook.
As for the future, we are open to any project that will improve efficiency and customer service even if the initial costs appear daunting. Very soon, we hope to put in place an “eKYC Authentication System” that will directly interface with UIDAI to establish the authenticity of the Aadhaar Card presented at the branch. We have also started work on “eWallet Cards” to replace cash transactions with customers lacking access to a bank account. Finally, with the objective of giving concrete shape to our technological vision, we are setting up an entirely new institution, the Manappuram Centre of Excellence and Innovation (MaCE Inn). Located at Bengaluru, this pioneering institution will spearhead all future technological innovations of the company and also be responsible for its operationalisation.
In his forthcoming book, ‘The Attacker’s Advantage’, the renowned management guru Ram Charan says that in the days ahead businesses will see ‘uncertainty and the bends in the road getting sharper’ thanks to the advancement of mathematical tools such as algorithms and the sophisticated software related to it. He is convinced that companies with extraordinary algorithmic capabilities (he calls them “Math houses”) will possess an advantage over the rest of the field. After all, in order to connect dumb devices through sensors, be it sensors in tyres, unmanned vehicles — for that matter, our eLockers and automated intrusion alerts — we need algorithms. Charan’s advice, therefore, is that every major company ought to have Math houses, either in-house or available with outside sources.
There’s no doubting that technology is frantically driving changes across the globe. To survive and to flourish within this environment, businesses must adapt to changes. The four major technologies now reshaping the business landscape are Internet of Things (IoT), Social Media, Mobility and Analytics (mathematics based predictions). With projects like IoT based eLockers using machine to machine (M2M) communications protocol, Manappuram is on course to take advantage of technology driven changes. In fact, our MaCE Inn initiative will further institutionalise this strategy.
In sum, with all our innovations in IT, along with the turnaround in gold loans (as reflected in our strong second and third quarter results), I am convinced that Manappuram Finance is poised for take-off into a higher orbit. Very soon, we will join the ranks of the most profitable and technologically advanced companies in the financial services sector in India.
Shri. V.P.Nanda Kumar