Historically IT has been used to cut turnaround times, automate processes and no doubt, it did bring in certain desired benefits in BFSI. However, if IT is allowed to significantly influence decisions, it would prove to be a bane. Quantitative factors alone cannot be allowed to determine the right level of risk management framework to be implemented in an organization. As long as the management can have a judicious mix of qualitative factors well assisted by the quantitative aspects churned by technology, a business will be successful.
It is not prudent to have a templatized model of lending or collections; it is essential to evaluate the business opportunities based on the demands of the situation. On the other hand, the efficacy of an IT system depends on how standard we are able to make the process so that the system can take automated decisions, in order to improve TAT and also reduce the errors due to manual intervention. The debate on standardization versus customization makes IT implementation challenging as well as interesting. Streamlining operations, with a view to bring about higher level of process efficiency, means achieving some level of standardization. Every business needs to evaluate the aspects of its operations that can be standardized without compromising the asset quality and robust financial modeling will help in this. Financial modeling based on historical experience can throw out key metrics that will need higher level of focus and may not be amenable for significant standardization.
But there have also been some setbacks due to the uncontrolled aggression of some of the players. Companies have had to take losses, trim their portfolios, due to which off late, we see the focus of IT being stronger analytical capabilities and MIS reports. The necessity to slice and dice the portfolio, identify stronger and weaker segments and carry out an in-depth analysis, not only to address the issues on hand but also to ensure that such issues don’t recur has become paramount. In this regard, India is a peculiar market and as such there are no stereotypes.
E-commerce and new payment banks are going to bring about the next level of revolution in the BFSI space. With the reducing mobile costs (both handset and data), there has been significant usage of mobile banking or mobile payments. And companies have been using this to establish connection with the customers.
Hence, by redefining the way businesses have been hitherto done, they have already brought about lot of changes to operational aspects. In addition, the analytical capabilities of the ERP solution especially on the collections and recovery processes will continue to take centre stage, at least in the foreseeable future. The focus will be on growth, not just for the sake of growth but on achieving a sustainable growth. However, given that there have been fairly recent developments, their success needs to be established. All I can say is that exciting times lie ahead for the BFSI sector; controlled aggression coupled with caution, be it in product development, risk management, technological framework, alone will make or mar a business.
