Digital eases collections; AI gives early warning signals

Insights into the impact of festivals, lockdown and technology on collections, payment mechanisms and customer behaviour:

In earlier days, collection was largely dependent on physical visits of agents to the borrowers’ places. However, digitization in the BFSI domain has rendered the activity convenient for both the lenders and the customers. In these times of the pandemic, digitization has also lessened the impact on collections. What indeed hampers collections is the issue of cash flow as customers are severely affected by the lockdown leading to extreme levels of debt. Festivals too play a role in the lack of cash.

Fincare Small Finance Bank operates in 19 states of the country and each of these states has its own set of festivals and events. The bank follows a few simple steps to deal with disruptions to routine business activities. During festivals or known holidays, it prepones payments of EMI with the consent of the customer. As much as 80-90% of collections are done in advance. The bank passes on the benefit of interest to the customers for the period during which collections are made in advance and what makes the whole process simple is the digitization the bank has adopted.

Soham Shukla, Chief Operating Officer - Rural Banking at Fincare Small Finance, says the bank has been using cashless payment systems. “We have piloted the UPI mode of collection for our JLG customers. During the lockdown phase, the same was used to collect EMIs from customers. However, the percentage of customers who opted for this platform is relatively low, predominantly due to lack of awareness or apprehensions about digital transactions in rural and semiurban markets,” he adds.