CIOIN

Anoop Handa

CIO, Fullerton Securities

We needed to cut opex costs but we also needed to ensure that the solution did not affect our turnaround time or customer service.

Executive summary

Fullerton shrank the time it took to approve a loan from 18 days to six days and simultaneously saved Rs 10 crore. This is how.

The Organization: Talk about business going elsewhere. According to 2011 BCG-CII study, 65 percent of low-income, Indian households will go anywhere else—even moneylenders—to get a loan rather than turn to financial service institutions. Their biggest grudges against financial institutions? Long transaction times.
That’s a problem Mumbai-based Fullerton India Credit Company, a non-banking finance company (NBFC), wanted to fix, especially because Fullerton lends mainly to customers in Tier-III and rural areas, tackling about 50,000 loan applications a month and disbursing Rs 225 crore.

The Business Case: But the company also had other problems. After it's launch in 2007, Fullerton saw a period of rapid growth. It opened 850 branches and its employee-strength crossed 15,000. Then the global recession hit and Fullerton was forced to consolidate.
“By the beginning of 2009, we needed a solution that could cut opex costs but we also needed to ensure whatever cost-efficient processes we put in place did not affect our turnaround time or customer service,” says CIO Anoop Handa.
The fact was Fullerton’s loan turnaround time was not best-in-class even then.  Loan officers at Fullerton’s 800 branches collected paper-based loan applications and supporting documentation, scanned them, and sent the images to a central operations team for booking and documents verification. If they passed it,  the file was sent to a central credit team for loan approval. The process got messier when incomplete applications or a lack of supporting documents, forced the central operations team to send back an application. This happened pretty often because about 45 percent of Fullerton’s business comes from customers in Tier-III cities and rural areas where obtaining documents for collateral, like a land agreement, is hard.

The constant to-and-fro of scanned images also increased Fullerton’s network bandwidth use and necessitated the buying and servicing of scanners and printers at 800 branches—eating heavily into opex and the time of IT staffers.

The Solution: “Our technology team led by SVP Rahul Bhardwal, devised a part offline/part online loan booking process and integrated it with Omniflow (a document management and workflow system),” says Handa. The new system introduced a 'booking sheet' that allows branch-level officers to fill in the details of a loan for the central credit and operations team to evaluate. This is seamlessly uploaded into Omniflow. The solution eliminates the need to use scanned images. More importantly, the system alerts branch level officers if they key in an invalid entry ensuring that incomplete applications are filtered out early.
The solution, says Handa, also checks against a database of existing or probable fraudsters and raises an alert at the branch level.

The Benefits: The solution has helped Fullerton shrink opex costs by Rs 10 crore, mainly in bandwidth reduction cost and the maintenance of scanners and printers. That’s plenty, especially for an organization that shrank its footprint from 800 in 2007 to 350 today to stay competitive. The system also cut the time it takes for a loan to be approved from about 18 days to six days.
That should drive some of that money-lender business back to Fullerton.