BT Best Banks Summit: Digital transformation revolutionising lending practices

At the Business Today Best Banks Summit at GIFT City, Ittira Davis, MD & CEO of Ujjivan Small Finance Bank, B Ramesh Babu, MD & CEO of Karur Vysya Bank, and Shallu Kaushik, Digital Head of Tata Capital, engaged in discussing the seismic shifts reshaping lending practices.

Babu emphasized the pivotal role of digitalization in reshaping lending practices, highlighting its impact on risk assessment and stress management. “Digital has helped us not only in consumer lending but both on the SME side and the corporate side also. Earlier everyone's was judgmental now all that subjectivity is out. Our approval rate used to be 90%. It has come down to around 48%. Then people felt saying that what is it that we're not doing properly? If you look at it now, if you divide our portfolio into two parts, pre-digital and post-digital, pre-digital there was stress of 7% now the post-digital, the stress of the portfolio is 0.6%. It has come down so drastically. Then we understood, that taking a 90% approval and having 7% stress than having a 48% approval and 0.6% stress is much better,” said Babu of Karur Vysya Bank

Davis echoed this sentiment, emphasizing the synergy between technological advancement and robust risk management systems. “The technology in the front is not by itself going to be able to solve the problem financially. You have to take care of what's happening behind. So I think it's a very interesting situation. So much is happening in the field and so much is being done. Even in a place like Bengaluru, we have the innovation hub of RBI, which is actually driving a lot of things in technology. But what is being done on the front has to be matched by the risk and support systems at the back. Otherwise, models are going to suffer. So all in all, what I'm trying to say is that we are in a very exciting time. Lots of new things are happening. And, you know, the lending revolution is here today,” said Davis of Ujjivan Small Finance Bank

Shallu Kaushik, Digital Head of Tata Capital, shed light on the multifaceted changes driving the lending revolution. From digital onboarding to self-service capabilities, Kaushik outlined the pillars of modern lending, focusing on customer-centricity and operational efficiency. “Banking and lending has gone through a paradigm shift, especially in the last two decades. One is obviously changing customer needs, regulatory aspects, technology advancement and responsible risk management. So, all of this has led to this kind of paradigm shift. I feel now we are able to take more informed decision. We are able to do away with some amount of biases. So this is helping us to grow much better and take better decisions. So I think all of this is helping in fostering the entire industry from our lending as well as the banking cycles,” said Kaushik.