Noida: The contribution of NBFCs towards supporting real economic activity and their role as a supplemental channel of credit intermediation alongside banks is well recognised. Over the years, the sector has undergone considerable evolution in terms of size, complexity, and interconnectedness within the financial sector. Many entities have grown and become systemically significant and hence there is a need to align the regulatory framework for NBFCs keeping in view their changing risk profile.
Compliance is a key aspect in any NBFCs. From lending to a small vendor to a large organization, the tech team in any NBFC company would have wide range of challenges.
The two day ‘Finnovation’ summit organized by APAC news network ended with the last session on how changing regulations and how NBFCs are looking at compliances. Rajneesh De, Consulting Editor, APAC News Network was the moderator while the panel included Sunder Krishnan, CRO, Reliance Nippon Life Insurance Company Ltd, Dhanasekaran Sivaraj, CTO, Belstar Microfinance Limited, Lalit Rout, CTO, Orange Retail Finance India and Vivek Madan, Head IT & Operations, Hero Housing Finance Limited. Here are the key things which every IT team in a NBFC should understand.
Sunder said that digital KYC and digital onboarding are becoming extremely important. He spoke in length on how video-based KYCs are changing the way the industry is functioning. According to him, there are also equal threats evolving in new technology adoptions and more threats are likely to happen.
For Dhanasekaran, the web 3.0 is evolving and tech had started touching the day today life of any NBFC customer. While everyone is expecting Web 3.0 to increase digital enablement and increase productivity, the consumer expectation and experience changes it also comes along with associated risks. However, today the customer experience is the king.
Lalit touched upon how compliance vs data privacy had to be tackled in the right way. Maintaining confidentiality besides keeping the customers happy is the key for any customer. Thus, for any NBFC player in the market, better service, data privacy, operational risks and implementations are key things to keep in mind.
For Vivek also, securing the customer data was extremely critical. As more and more data are going to the cloud, the right cloud security framework is important. He also mentioned that data leaks might not happen outside the organization but within the organization too.
Vivek listed that risks should be approached on three parameters
- The probability of the event happening
- Severity in case of a failure
- If the event happens how fast you can recover and make it happen again
He also mentioned about Poka-yoke method which is to ensure the quality of any work done in a fool-proof method.
Dhanasekaran also pointed out that earlier KYC details were questionable and now, the latest technology had enabled the banking heads to go for compliance in a matter of seconds.
Lalit observed that new technologies had empowered financial inclusions and new banking and digital innovations. He recalled how a single app can be used for payment, compliance, verification, e-kyc and more. On the other side AI and ML had been used extensively for fraud detections.
Lalit recalled how new regulations on data privacy will take shape only crypto currency comes into place in full swing.
As a prediction. Vivek mentioned the following
- AI and machine learning will be more in the NBFC sector
- Bots will start interacting more with the customers
- Collection of information from the customer will be more effective
Overall the panel spoke on creating standard-operating procedures for these future-ready technologies.
B Swaminathan
