Loan segments that have traditionally involved a high-touch model by their very nature, such as gold loans, are also feeling the need to have some collections coming in digitally.
Banks and non-banking financial companies (NBFCs) have increased their collections through digital channels as the lockdown made it harder for them to reach some of their customers. Industry executives said that lenders have been ramping up their digital collection capabilities or tying up with agencies who offer such services. Among those who are understood to have increased their reliance on digital-driven collections are HDFC Bank, ICICI Bank and Bajaj Finance.
Banks agree that collections through the digital route have gone up. Kotak Mahindra Bank saw digital payments in the credit cards segment increase to 98% from 92-93% before the lockdown. This is partially due to the convenience of digital payments and the multiple digital payment options available to customers and partially due to the restrictions placed by the lockdown, said Ambuj Chandna, president – consumer assets, Kotak Mahindra Bank (KMB). “To make payments easier for our customers during the lockdown, the bank partnered with payment gateways for a single click payment option to loan customers, beginning with credit cards.
Through this option, a credit card/loan customer gets a prefilled demand from the bank and the customer has to simply select the payment mode, which can be UPI, net banking or debit card, complete payment authentication and payment gets processed instantly,” Chandna said.
KMB has also implemented a seamless, conversational artificial intelligence (AI)-based bot calling feature where the bot is trained to interact with customers and guide them on payments through an integrated payment gateway. The whole process is human-less and can manage huge volumes within a short time span, Chandna said.
The other lenders referred to above did not respond to emailed queries.
Large non-bank players are not far behind. In a post-results call, Bajaj Finance told analysts that it is significantly augmenting its collection capabilities. “We have used the last 60 days to significantly augment, expand our collections capacity model, so that as markets start to open, whether it’s green, orange or red, or what we are increasingly calling internally,deep red, we are ready to rapidly move and engage our clients to be able to collect efficiently and effectively. And we are not waiting for it to open,” Bajaj Finance managing director Rajeev Jain said. Sources said that some of this capability-building has been in the area of digital and that has helped the company reduce bounce rates May onwards.
Loan segments that have traditionally involved a high-touch model by their very nature, such as gold loans, are also feeling the need to have some collections coming in digitally. Muthoot Finance managing director George Alexander Muthoot told FE that the share of the company’s customers repaying online has risen to 40% from 18% before the Covid outbreak.
There has been an uptick in the share of electronic modes of repayments in the system, according to industry executives. Sumeet Srivastava, founder of consumer data analytics platform Spocto, said that digital repayments have risen amid job losses and salary cuts in lenders’ telecalling and field units. As the migration of a part of the workforce leads to a shrinkage in recovery and collection staff, lenders may increase their pie of digital collections.