Carlyle, a Scottish essayist and historian, explained the essence of running an effective business, way back in the Victorian era.
A couple of hundred years on, a leading non-banking financial company (NBFC) has taken Carlyle's ideas literally. Mahindra & Mahindra Financial Services, with its business cemented in rural and semi-urban India, wanted to expand its reach and quicken the delivery of its services across remote areas of the country. So, Suresh Shanmugam, the national head of Business Information Technology Solutions (BITS) and CIO at Mahindra Finance, led a team that helped the organization keep its customers clearly in hand.
Instead of setting up more branches to cover rural India, Shanmugam and his team transformed about 3,000 of Mahindra Finance's on-field workforce into roaming mini-branches. Armed with wirelessly online handhelds, this mobile workforce ensures that Mahindra Finance reaches the doorstep of its consumers, living in far-flung villages or semi-urban locations. They also act as mini-branches (the brick-and-mortar ones can be as far as a couple of hundreds of kilometers away) equipped to conduct financial transactions and update the central servers at the company's headquarters in Mumbai, all in a jiffy.
The IT team enabled the enterprise to increase Mahindra Finance's 300-odd fully networked branches to a whopping 3,000 in less than nine months. And that was achieved -- without any investment in brick-and-mortar infrastructure or headcount.
Missing Links
Mahindra Finance, part of the Mahindra & Mahindra conglomerate, is a leading rural NBFC and has about 430-odd branches and about 4,000 employees. The financing major offers personal, vehicular and housing loans, insurance and mutual fund products to rural and semi-urban customers of the country. The nationwide distribution network of the organization soon proved a challenge for Mahindra Finance which wanted to rollout out branches faster, deploy IT applications quicker and manage their operations with more granularity.
It is a known fact that agility and transparency are paramount for any business to succeed. Adequate interconnectivity and the seamless flow of information help organizations become competitively agile and transparent enough for their senior management to take quick business decisions.
But the expanse and reach of the company looked like an insurmountable roadblock.
The problem wasn't new. Shanmugam and his team had already ensured seamless interconnectivity with about 418 branches riding on various networking technologies, such as MPLS-based leased lines, VSATs and ISDN connections.
However, despite core business apps interfacing with the systems deployed at remote branches, Shanmugam realized that the organization was wasting a lot of time gathering data in the last mile -- between the consumer and the employee. It made all their work look like it just wasn't enough.
"Although, most of our branches were networked, we found that we missed crucial information related to business transactions happening outside of our offices. We only had data regarding transactions that happened within our premises. A large portion of our on-field employees and agents were reaching out to consumers at their doorsteps to either initiate business or collect EMI payments. The information captured in that last mile was getting either delayed or lost in translation," recalls Shanmugam.
The problem also increased the NBFC's risk exposure since it only had a fudgy picture of how its executives had collected from existing consumers in EMIs.
"Connectivity between our office and our field executives was one of the biggest issues we faced. Other than that, there was no proper control on cash flow and monitoring of performance," remembers Santanu Roy, business regional head (Chandigarh).
That was because, with consumers staying as far as about 300 kilometers away from their nearest Mahindra Finance branch, collection teams traveled for days to meet multiple consumers and get back to the branch with updates on EMI collection. These updates, whether cash collection, verbal negotiations, future payment commitments, consumer queries or any other communication, were then noted and entered into the NBFC's systems.
This process created a world of paperwork, delays and old data. Worse it got in the way of work at remote branches.
"Such last minute updates not only pressurized the branch staff during monthly financial closing, but also overloaded the networking infrastructure between the branches and the datacenter. Further, management couldn't get its hands on a timely review of the collection status as the information, coming in from the branches, overshot monthly closing time by about 10 days. Monthly books were taking about 40 days to close. Such manual MIS management lost us value in terms of both time and money," says Shanmugam.
Reaching Out
The existing investment in a robust network was clearly not delivering benefits because of the lost last-mile information. That's when Shanmugam decided that it was about time they did some out-of-the-box thinking -- and fast. The longer they waited, the more consumers and business they were losing.
MFConnect-3000, Shanmugam's brain child, was devised to fix the last-mile problem. This networked mobile workforce initiative promised to take care of all Mahindra Finance's problems. "Instead of increasing the number of branches to further our reach, we decided to transform our on-field executives into mini-branches to bridge the last mile gap," says Shanmugam.
About 2,800 employees were equipped with Wi-Fi and GPRS enabled, VisionTek handhelds, running Linux as an operating system, and weighing about 750 grams. The handheld was pre-loaded with indigenously developed custom-made, multi-lingual business application modules to capture on-site data and update the central servers directly through the Internet.
With handhelds at their disposal, a collection executive gets details of the consumers beforehand, enabling him to plan his time and route appropriately. Once on-site, he can either issue receipts to the consumer from the attached thermal ink printer after collecting an EMI payment. He can also create information trails, address business queries, record customer commitments and note relevant information for further follow-ups, undertaken with the customer at his doorstep.
All this information, riding on a GPRS network, is updated on Mahindra Finance's central servers directly from the device. This provides business heads -- from the controllers of the collection team to senior management -- with up-to-date status in real time.
Once an executive is back at the branch, the cash collected is deposited with an accountant, who in turn updates the systems. The automated MIS management based on online data flow enables the enterprise to have complete visibility of cashflow. This has a bigger impact than most people assume as the typical size of an EMI is between Rs 10,000 (US$205) to about Rs 2 lakh. The enterprise can leverage the information captured right from the door-step of a customer to adequately plan business actions and maximize ROI.
Chain of Rewards
MFConnect-3000 eased Mahindra Finance's operations. But that was not it. It brought with it an additional set of benefits.
Capturing data on-site ensures the security of payment-related information in case of a loss of manual receipts. The errors at the time of capturing information are avoided by having a customer crosscheck his details. It also takes away the duplication of work by data entry operators. The day-end cash handover process and the collection of post-disbursement documents and renewal follow-ups have also been made easier.
"This made sure that we are able to relieve significant back-office strength to attend to other critical business activities. This has reduced our turn-around time on addressing customer queries and requirements by about 75 percent. Moreover, monthly closing of financial books happens on time, without too much of a stress on both human resources and technology infrastructure," says Shanmugam.
The efficiency and performance of the collection teams can also be examined through timely information updates coming in from their devices. An executive's incentive is also automatically measured using the data related to the cash collection being captured by the handheld devices. "We justify the efforts of executives to update information and aid timely reconciliation and closing of books as an 'earn-for- yourself' endeavor," says Shanmugam. "Ever since the launch of the handheld devices, we have had proper updates directly from the field, minute by minute. We tactically capture these updates into our system to generate various types of MIS reports for senior management to address various business scenarios with lower turnaround time," points out Khalid Abdul, business project head (mobility), Mahindra Finance.
Next Step
Keeping in mind the impact mobility has created on the payment collection process at Mahindra Finance, Shanmugam is planning to address the business demand of introducing handhelds to the business initiation teams as well.
Executives who meet customers for the first time want to initiate them into the various programs of the company. This can range from applying for various financial products, seeking thumb impressions, scanning documents for collateral and taking pictures of the applicants. Mahindra Finance wants to enable its executives capture this data on their handhelds.
"Though we planned to make this move within this financial year itself, incorporating functionalities required to initiate business in the handhelds pose technological and cultural problems," points out Shanmugam.
Creating digital thumb impressions, for example, requires large memory on the devices. And lowering the resolution of the impressions makes it difficult for the systems to match and authenticate later on.
"Also, photography can be a tricky cultural issue. Since many rural superstitions scare people from being photographed, executives can't directly photograph an applicant," says Shanmugam.
Nevertheless, the IT team has already embarked on its testing and trial phase to figure out adequate solutions to various problems before introducing similar mobility infrastructure to generate business in rural India.
In the meanwhile, end-user experience has definitely improved. The organization is also keen on enhancing customer services by delivering new products quickly. "We are now looking to leverage mobile connectivity to better our return on investment," says Shanmugam.
"Our focus is on the future and we are implementing ideas for tomorrow. We consider IT as our tactical and strategic support as it will help the objective of achieving business growth in a smarter way," says Roy.
Not exactly what Thomas Carlyle prescribed, but just as smart.
