Piramal CTO Saurabh Mittal on financial services innovation

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To create innovative products that meet the diverse financial needs of the market, Piramal Capital & Housing Finance opened the Piramal Innovation Lab in Bengaluru on 15th December 2022. The 36,000 sq. ft. innovation hub will be led by the company’s CTO, Saurabh Mittal and Markandey Upadhyay, head of Piramal’s business intelligence unit.

CIO.com caught up with Mittal to learn more about his plans for the innovation lab, as well as the technology strategy for the financial services company.

CIO.com: What solutions will emerge in the innovation lab and what technologies would you use to develop them?

Mittal: As a company, we have adopted a ‘tech first’ approach, which is reflected in business thinking, functions and processes throughout the organisation. Our philosophy is to identify problems or opportunities, size them and build technological solutions to address them. Sometimes we’ll see success, sometimes we’ll need a few iterations, but that’s the approach we’re going to pursue. The purpose of this innovation lab, therefore, will be to identify problems and create solutions for them.

Some of the key issues we are working on include building an underwriting solution for our customers in tier 2 and 3 cities. Unlike salaried people in tier one cities, most people in smaller cities can be a self-employed person and engaged in small businesses. A subscription infrastructure will allow us to leverage the information, which is available across these broad customer groups, and feed it into certain projection models that will enable us to make credit decisions at scale.

There is still no place in the industry where you can get a home loan in minutes. Therefore, we are working to reduce delivery times for our home loan customers and instant decisions and disbursements for our unsecured mortgage customers.

Another interesting area we are focusing on is bank statement analysis. We receive all types of bank statements in various formats, but there is no single solution in the industry that can help derive client income.

We will be heavily using data, artificial intelligence, and machine learning to develop these products. Through the new state-of-the-art innovation center, we intend to attract qualified resources in the fields of product management, data sciences, user experience and software engineering. The company aims to build a team of more than 300 technology professionals by the end of fiscal year 23.

But for a relatively new entrant to the market, it’s also important to leverage the technology and quickly create a competitive differentiator for the business. How did you do?

We’re only about two years old and we’re catching up with the best in some areas. However, at the same time, there are many areas where we are ahead of the others. For example, we had a paper-based process for registering DSAs [direct sales agents], go into the field and get business for us. The process, which was long and frustrating, took seven days to onboard a channel partner. We reinvented that process and turned it into a fully digital journey. Now DSAs register on average in 12 minutes. I’m told it’s an industry first.

So we have incorporated financial partners. Think of them as various types of consumer technology companies or fintechs, who want to lend in partnership with us, seeking access to our customers. To enable this, we turned to the API. The API stack in the backend allows customers to interact with lenders. The Embedded Finance business has enabled us to get 22 of our partners to launch over 24 programs in partnership with leading digital consumer and merchant engagement platforms. The fastest time we went live with a partner was about four weeks, which is also an industry first capability. We are way ahead in our API thinking.

Our credit managers meet potential customers and ask various questions in a personal discussion. Based on the outcome of this personal discussion, the credit manager decides whether or not to grant the customer a loan. We have incorporated intelligence into this personal discussion process. While the credit manager asks questions, he gets feedback due to the dynamic scoring that happens in the backend. Based on the score that occurs in real time, the credit manager can pause and reject or approve a customer. I don’t think such a personal discussion tool has been developed by any other player yet.

I think we were a little lucky being a young company, we didn’t have a lot of legacy systems to manage other than what we got from the DHFL acquisition. When we acquired DHFL, we had an on-premise data center that was migrated to the cloud.

These solutions and others in the pipeline will add to the company’s top line. How are you driving profits through technology?

Let me illustrate this with the example of collections. Collections could only take place in offline mode. To drive efficiency in this area, we’ve created a smart app called Collection Central. Through AI and ML models, the app tells us that a particular customer will pay if you send them a message or have to make a phone call or field visit to a particular customer. This ensures that we are not doing a field visit for every customer. These solutions, powered by data-fueled intelligence, drive efficiency. It will be difficult for me to say whether we collect more because of such solutions, but I can confidently say that we collect faster and cheaper thanks to them.

Blockchain holds promise for financial services firms as it can lead to cheaper and faster transactions, increased security, and automated contracts. How are you maximizing it for Piramal?

Mittal: We don’t have any active investments in the blockchain yet. One of the areas where blockchain can play a vital role is as a property registrar. It is hard work to identify the authenticity of ownership documents and then trace their legacy from the first buyer until now. Building an industry-independent, blockchain-enabled property registration platform that gives us confidence that the title is valid is critical, but use cases like these would be more industry-wide opportunities. Some of these, therefore, should be taken up within the Digital Lenders Association or other forums where you need to garner support from other players.

Most financial services companies have isolated data across multiple business units. How do you ensure data is democratized to deliver personalized CX?

We have a single multi-product platform that internally branches into different streams depending on the product used. We have one app that all business units use for all products, but it works differently depending on which product they’re starting the journey with.

We have ensured that all our data is generated and stored in one place so that anyone can consume and use it. Every single piece of data from the platform flows into a data warehouse that provides data accessibility to anyone who needs it, whether for a report or visualization analytic needs or to build projection and machine learning models.

We have mandated that any new microservices or applications are not put into production if they are not pushing the required data items into the data warehouse. To facilitate this, we created a “push case” architecture that allows any new application to push data directly to the data warehouse, greatly simplifying the task for developers and application owners.

As a CTO, what are some of the biggest challenges you face?

Mittal: The biggest challenge has been hiring the kind of talent we would like to have. About a year and a half ago, we didn’t have a single software development engineer in the company. We started by defining the job description, roles, responsibilities and attracting talent. We’ve had our success for the past year and a half, but the innovation lab will now accelerate that.

The other big challenge is the constraints we face while working with third-party systems. We are cloud native and have designed everything with the cloud in mind. For example, we’ve been using serverless computing and cloud-managed databases since day one. In addition to the benefits of on-demand provisioning, elasticity and deep observability, it helps us focus on the core business.

However, third-party systems may not have been designed for the cloud, which creates bottlenecks for our strategy and operations. We keep thinking about how we can bring cloud-native thinking there to improve the setup.

Going forward, what will be the key business and technology trends in this sector?

Mittal: In the lending world, the account aggregator is one thing that is likely to see exponential growth next year. It’s particularly relevant to the large segment of customers that we serve that are new to the credit foundation. We have no civil record for such clients and need to have their reliable bank statements. Hence, the account aggregator to get authenticated, verified and trusted bank statements with very low friction is the need of the hour. The push from various regulators is already there, and because of this, we strongly believe that the account aggregator will be a big thing next year in the lending world.

The other technology that’s going to go into a completely different orbit is machine learning. As all lenders build ML models based on internal and industry data, their minds are widening to new possibilities. With ChatGPT, DALL.E and other innovations all around us, a completely different set of opportunities is emerging and it is possible to deliver unthinkable experiences to customers and internal users using machine learning.

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