Vishakha Mulye on debt as collateral, agile fintech models and the new era of consumerism

“The cost of delivering the product has come down drastically while the cost of customer acquisition had increased substantially as we are now faced with customers with many choices,” says Mulye.

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The CEO of Aditya Birla Capital shared invaluable insights on ‘the opportunities and challenges of designing solutions for new age customers.’

It is often said that if you can anticipate the behaviour and articulate the expectations of the young, new age consumer, you are a true winner. This may be easier said than done. It was therefore with good reason that Financial Express Online chose to listen and learn from Vishakha Mulye, a veteran in the finance arena and the CEO of Aditya Birla Capital.

In a fireside chat with this writer at the just concluded FE Fintech Summit 2023, Mulye shared invaluable insights on ‘the opportunities and challenges of designing solutions for new age customers.’ She began by stating upfront that understanding the customer was a journey and an evolution wherein no one could claim to be knowing the customer really well. But then, Mulye reminds, these were also very familiar shoppers that we, through their biggest representatives – the children back home- seem to be engaging with all the time.

“They are very confident about themselves, know exactly what they want, are impatient and,” as she says, are “today also empowered to exercise their choices.”

Changing shopping habits

To cater to the needs of this audience, firms need to reorient and adapt. But they first need to acknowledge and unlearn what was gathered in the past. “There is a particular way of doing things and that is changing” and this, is triggered by the fact that the customer was changing. “The genesis for any business,” she says, “is the customer and the customer is changing and so are the preferences. He or she wants to take his or her own decisions, is impatient, is techno savvy and wants to study multiple options before making a final choice.”

So, the product and solution provider’s approach had to also change to stay in sync with how the new consumers shops, what he or she buys and what he or she professes.

Product design & new mindset

It was no more about first designing a product and taking it to the consumer but was the other way round.

“We need to really look at the customer and segment the offering very carefully – even a millennial in a tier 2 or tier 3 city or town is different from the one in a large metro. All of it makes curating the product to suit a particular customer becomes very important.

Therefore, now the reorientation is from a mindset of going to market with a product first to now start thinking about the product at the design stage, be clear about the customer segment and then curating the product accordingly. This is a big change.”

Add to this, she says, “today we have a lot of data points and the analytics help you to understand the customer preferences better. This can help design the products and services better and also be with the customer when he or she needs the product. So, checkout financing is becoming the norm.”

In keeping with this, even the channels for delivering the product are changing. In the past it involved meeting the customer but now multi-channel or omni-channel is getting to be the norm. It is not surprising therefore that even globally, those who began with brick and mortar presence are adding a digital layer and those that were purely digital are making a physical presence.

New Cost Equations

Finally, she says, “the cost of delivering the product has come down drastically while the cost of customer acquisition had increased substantially as we are now faced with customers with many choices.”

The nub really lay in becoming more agile and in attempting to reinvent rapidly in this process of evolution.

Looking back at the three decades she spent at ICICI and eight months back moving to Aditya Birla Capital, she says, “we have here an entire range of financial products under our umbrella – we have NBFC, which is into lending, we have housing, life insurance, health insurance, we have mutual fund and stock broking and so on and each of these entities have done very well” but it was all about curating products to meet the specific needs of the customer.

Elaborating on the changing consumer expectations and the required agile producer responses, she explains, “as for the customer, who has a very different profile from what used to be the case earlier, and is also looking for some entity that can give a complete solution for the requirements that he or she may have.

This could be, she said, “what we call, PIFA (Protecting, Investing, Financing and Advisory) so therefore the best for the customer was not having to deal with five different companies (entities) and to only transact over a platform.”

So, what could then be the mantra to succeed, as it were, in this next era of consumerism? “We understand the customer better, get to look at our products from the customers’ lens rather than looking at the customer from a product lens because the products needs may change with age. And being able to do this and also offer the whole range of products is really the agility customer needs. In such a format, not only can you make your existing products available but can also keep adding. Therefore,” she says, “what we see today is this complete change in approach.”

Data replacing collateral

On whether data will get to replace collateral, Mulye feels it is already happening. “If you look at the check-out financing that we are doing or BNPL (buy now pay later), it is completely unsecured and we do not take any collateral for this. Many times, if you look at the entire supply chain financing, something that I am extremely bullish about. As Aditya Birla Capital, we are launching our B2B platform.”

In supply chain financing, she explains, “if you can capture the money in motion – a large company and its downstream suppliers you can capture the money in motion and therefore see that cash flow (the entire cycle of the working capital) and be able to capture it well then you don’t need a collateral. The entire revolution that has happened in the country with the GST data. In the past it was very difficult to go and assess whether the financial statements really represented a fair view. Now, with the GST data and with the consent of the customer, you can draw the balance sheet and P& L of the customer. Collateral is needed when the customer goes belly up and leading to liquidation but then why wait for that? So, yes,” she says, “data is replacing collateral and as data gets more enriched, newer models will emerge and your own experience will get further refined. Today, already most of the personal loans are unsecured. If someone has 700 plus CIBIL score or new to credit then it is better to do a personal loan than a collateral loan because the difference in the yield is almost 2 or 3 per cent.”

Path to Profitability

On the way ahead and the immediate concerns, she says, “we want fintechs to succeed, scale up and move on the path to profitablility, which is still not articulated very well as yet.” Also, she reminds, “this no longer a nascent industry and we for instance at Aditya Birla Capital, are already work with 21 fintechs.”

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First published on: 07-03-2023 at 18:58 IST
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