To create innovative products that meet the various finance requirements of the market, Piramal Capital & Housing Finance opened the Piramal Innovation Lab in Bengaluru on Dec. 15, 2022. The 36,000-square-foot innovation hub will be led by the company\u2019s CTO, Saurabh Mittal, and Markandey Upadhyay, head of business intelligence unit for Piramal.\n\nCIO.com caught up with Mittal to know more about his plans for the innovation lab, as well as the technology strategy for the financial services company.\n\nCIO.com: What solutions will come up at the innovation lab and which technologies would you be leveraging for developing them?\n\nMittal: As a company, we have taken a \u2018tech first\u2019 approach, which reflects in the thinking, functions, and business processes across the organization. Our philosophy is to identify problems or opportunities, size them, and build technology solutions to address them. Sometimes we will see success, sometimes we will require a few iterations, but that\u2019s the approach that we will pursue. The purpose of this innovation lab, therefore, will be to identify problems and create solutions for them.\n\nSome of the key problems that we are working on include creating an underwriting solution for our customers in tier 2 and 3 cities. Unlike salaried people in tier 1 cities, most people in smaller cities may be self-employed and engaged in small businesses. An underwriting infrastructure will allow us to leverage information, available across these wide sets of customers, by feeding it into certain projection models that will enable us to take credit decisions at scale.\n\nThere still isn\u2019t a place in the industry where you can get a home loan in minutes. So, we are working on reducing turn-around times for our home loan customers, and instant decisions and disbursements for our unsecured loan customers.\n\nAnother interesting area we are focusing on is that of bank statement analysis. We receive all kinds of bank statements in various formats but there isn\u2019t a single solution in the industry that can help derive the income of the customer.\n\nTo develop these products, we will heavily use data, artificial intelligence, and machine learning. Through the new state-of the-art innovation centre, we intend to attract skilled resources in the areas 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 FY23.\n\nBut for a relatively new entrant in the market, it is also important to leverage technology and quickly create a competitive differentiator for the company. How have you done that?\n\nWe are just about two years old and are catching up with the best in certain areas. However, at the same time, there are a whole lot of areas where we are ahead of others. For instance, we had a paper-based process to sign up DSAs [direct sales agents], go in the field and source business for us. The process, which was long and frustrating, took seven days to onboard a channel partner. We reimagined that process and converted it to a completely digital journey. Now DSAs get signed up in an average of 12 minutes. I\u2019m told that\u2019s an industry first.\n\nThen we\u2019ve got embedded finance partners. Think of them as various kinds of consumer tech or fintech companies, who want to give loans in partnership with us, seeking access to our customers. To enable this, we have turned to APIs. The API stack at the back end enables customers to interact with the lenders. The Embedded Finance business has allowed us to get 22 of our partners to launch over 24 programs in collaboration with leading digital consumers and merchant engagement platforms. The fastest that we\u2019ve gone live with a partner has been about four weeks, which is also an industry-first capability. We are far ahead in our API thinking.\n\nOur credit managers meet potential customers and ask various questions as part of a personal discussion. Based upon the outcome of this personal discussion, the credit manager takes a decision whether the customer should be extended a loan or not. We have embedded intelligence into this process of personal discussion. As the credit manager asks questions, he gets feedback because of the dynamic scoring happening at the back end. Based on the scoring happening in real-time, the credit manager can pause and reject or approve a customer. I don\u2019t think that such a personal discussion tool has been developed by any other player yet.\n\nI think we got a bit lucky as being a young company we didn\u2019t have a whole lot of legacy systems to deal with other than what we got from the DHFL acquisition. When we acquired DHFL, we had an on-prem data center that has been migrated to the cloud.\n\nThese solutions and the others in the pipeline will add to the company\u2019s top line. How are you boosting the bottom line through technology?\n\nLet me illustrate this with the example of collections. Collections could happen purely in an offline manner. To drive efficiencies in this area, we have built an intelligent app called Collection Central. Through AI and ML models, the app tells us that a particular customer will pay if you send a message to him or her or need to make a phone call or a field visit to a certain customer. This ensures we\u2019re not making a field visit for every customer. Such solutions, supported by intelligence powered by the data, drive efficiencies. It\u2019ll be hard for me to say whether we collect more because of such solutions but I can confidently say that we collect faster and with lesser cost because of them.\n\nBlockchain holds promise for financial service companies as it can lead to cheaper and faster transactions, enhanced security, and automated contracts. How are you maximizing it for Piramal?\n\nMittal: We don\u2019t have active investments in blockchain yet. One of the areas where blockchain can play a vital role is that of a property registrar. It\u2019s hard work to identify the genuineness of property documents and then tracing its legacy all the way from the first buyer till now. Building an industry-neutral property registration platform, enabled by blockchain, that gives us assurance that the property title is valid is crucial but use cases like these would be more of industry-wide opportunities. Some of these, therefore, would have to be taken up within the Digital Lenders Association or other forums where you must garner support from other players.\n\nMost financial services companies have data siloed in multiple business units. How do you ensure that data is democratized to deliver personalized CX?\n\nWe have a single multi-product platform that internally branches out into different flows depending on what product in being used. We have a single app that all business units use for all the products, but it plays out differently depending on which product they are starting the journey for.\n\nWe have ensured that all our data is generated and stored in a single place in a manner such that anybody can consume and use it. Every single piece of data from the platform flows into a data warehouse that provides accessibility of data to whoever needs it, either for a report or for visualization analytical needs or for building projection and machine learning models on top of that.\n\nWe have mandated that any new microservices or applications will not be put into production if they are not pushing the required data elements into the data warehouse. To facilitate this, we have created a \u2018push case architecture\u2019 that allows any new application to push data to the data warehouse directly, making it very easy for developers and application owners to do so.\n\nAs a CTO, what are some of the biggest challenges that you face?\n\nMittal: The biggest challenge has been hiring the kind of talent we would like to have. About a year and a half back, we didn\u2019t have a single software development engineer in the company. We started by defining the job description, roles, responsibilities, and attracting talent. We had our success in the last year and a half, but the innovation lab will now accelerate it.\n\nThe other big challenge relates to constraints that we face while working with third-party systems. We have cloud native and have designed everything keeping cloud in mind. For instance, from day one, we use serverless computing and cloud-managed databases. Besides the benefits of on-demand provisioning, elasticity, and deep observability, it helps us to focus on the core business.\n\nHowever, third-party systems may not have been designed for the cloud, which creates bottlenecks for our strategy and operations. We keep thinking how we can bring in the cloud native thinking there to improve the setup.\n\nGoing forward, what will be the top business and technology trends in this industry?\n\nMittal: In the lending world, account aggregator is one thing that is likely to see exponential growth next year. It is especially relevant for the large segment of customers we serve, who are new to credit base. We don\u2019t have a civil record for such customers and need to have their reliable bank statements. So, account aggregator to get authenticated, verified, and reliable bank statements with very low friction is the need of the hour. The push from various regulators is already there, and on this account, we strongly believe that account aggregator will be a major thing next year in the lending world.\n\nThe other technology that will go to a different orbit altogether is machine learning. While all lenders build ML models based on internal and industry data, the mind is opening to newer possibilities. With ChatGPT, DALL.E, and other innovations around us, there is a completely different set of opportunities emerging and unthinkable experiences can be offered to customers and internal users using machine learning.