The function that SMEs play in an economy is well established in terms of their role in facilitating growth, generating wealth, and creating employment. Importantly, SMEs operate under complex conditions where a persistent financing gap constrains working capital and limits available cash flow thereby impeding their ability to realise new opportunities. It is within this context that India-based South Indian Bank (SIB) has deftly introduced a GST Business Loan offering designed to augment the SME sector in the country.
Consider, that the SIB GST Business Loan is a fully digital lending solution that is based on the Goods and Services Tax returns filed by respective SME entities. Furthermore, lending terms take into account both the bureau score and various socio-economic scoring parameters to ensure appropriate risk-based pricing. The uptake from clients has been favorable given that within a period of one month, a total of INR 600 million in loans were disbursed to 491 SMEs driven primarily by SIB’s unique digital proposition.
Digital strategy designed to enrich SME client experience
Indeed, the Bank has a dedicated strategy designed to leverage the best-in-class technologies to support the sophisticated needs of SMEs across all touchpoints and powered by resilient and scalable systems. Having fully embraced digital transformation, SIB recognizes the value in executing a multi-pronged digital strategy developed on the basis of an Indulge, Nudge, Purge and Forge (INPF) framework to ensure that the requisite offerings such as the GST Business Loan can be effectively delivered.
Focusing on the Indulge strategy, SIB has resolved to offer clients a range of self-service options to execute their SME banking functions, while through Nudge it encourages customers to migrate to digital. Similarly, the Purge strategy ensures the automation of processes on a priority basis by discarding manual steps and legacy systems, while Forge advances impactful collaboration and partnership with relevant fintech companies.
Rethinking effective digital journeys that are transforming customer relationships
Recent initiatives that speak to the efficacy of this unique model include the video-KYC account opening to facilitate customer onboarding, the SIB OneCard Credit Card issuance platform enabling payments, and export receivable factoring under the lending vertical. Furthermore, the Bank has constituted a MarTech platform that purposefully deploys push notifications, email marketing, social media marketing, etc. for targeted campaigns.
A closer examination reveals that the video KYC account opening has empowered clients to open the desired account within minutes, while the SIB OneCard Credit Card issuance platform ensures instant card issuance for eligible customers. Likewise, the Bank also offers export receivable factoring services priced at around 80%, with discounting of export receivables conducted only once appropriate documents are shared by the exporter via the online portal.
Fundamentally, for SME clients, the online MSME lending portal has proven to be decisive for customers seeking to secure instant in-principal loan approvals for up to INR 10 million with the entire end-to-end digital journey being completed within 10 minutes.
Application of emerging technologies to deepen digital engagements
SIB remains focused on effectively using emerging technologies such as Artificial Intelligence and Machine Learning (AI/ML) to fully automate and enhance both its front-end and back-end processes. The Bank has enabled 250 plus processes with Robotic Process Automation (RPA). Similarly, SIB is considering blockchain-based use-cases for application in the business, through its investment in local fintech IBBIC, engagement with the NPCI initiative “Vajra”, as well as ensuring preparedness for the Reserve Bank of India’s launch of a Central Bank Digital Currency (CBDC).
The Bank is also exploring potential participation in the Account Aggregator ecosystem that will augment credit underwriting and reduce reliance on conventional bureau score-based lending practices. This Open Credit Enablement Network (OCEN) will help users to source digital financing having the flexibility to choose what financial data with which entity.
Certainly, South Indian Bank has methodically transformed its digital engagement strategy, particularly for SMEs which has materially contributed to an enhanced customer experience. Affirming its institutional achievements, The Digital Banker has recognized South Indian Bank for a Highly Acclaimed “Outstanding Digital CX – SME Loans” distinction at the recently concluded Digital CX Awards 2023.
“Focusing on the Indulge strategy, SIB has resolved to offer clients a range of self-service options to execute their SME banking functions.”
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