Vishakha Mulye on debt as security, agile fintech models and the new era of consumerism

The CEO of Aditya Birla Capital shared invaluable insights on “the opportunities and challenges of designing solutions for new-age customers.”

It is often said that if you can anticipate the behavior and articulate the expectations of the young, new age consumer, you are onto a real winner. This may be easier said than done. It was therefore with good reason that Financial Express Online chose to listen and learn from Vishakha Mulyea veteran in the financial arena and managing director of Aditya Birla Capital.

In a fireside chat with this writer, Mulye shared invaluable insights about “the opportunities and challenges of designing solutions for new-age customers.” She began by saying up front that understanding the customer was a journey and an evolution where no one could claim to know the customer very well. But then, Mulye reminds, these were also very famous shoppers who we, through their biggest representatives – the children at home – seem to be engaged with all the time.

“They are very sure of themselves, know exactly what they want, are impatient and,” as she says, “today are also empowered to exercise their choices.”

Change in shopping habits

To meet the needs of this target group, companies must reorient themselves and adapt. But they must first acknowledge and unlearn what was gathered in the past. “It’s a particular way of doing things and it’s changing”, and this was triggered by the fact that the customer was changing. “The origin of any business,” she says, “is the customer and the customer changes and so do preferences. He or she wants to make his own decisions, is impatient, is techno savvy and wants to study several options before making a decision final choice.”

So the product and solution provider’s approach also had to change to be in sync with how the new consumers shop, what he or she buys and what he or she subscribes to.

Product design and new thinking

It was no longer about first designing a product and taking it to the consumer, but the other way around.

“We really have to look at the customer and segment the offering very carefully – even a millennial in a tier 2 or tier 3 town or city is different from one in a major metro. All of this makes it very important to curate the product to fit a specific customer.

Therefore, the reorientation is now from a mindset of going to market with a product first to now start thinking about the product at the design stage, be clear on the customer segment and then curate the product accordingly. This is a big change.”

Add to this, she says, “today we have a lot of data points, and the analytics help you understand customer preferences better. This can help to design the products and services better and also be with the customer when he or she needs the product. So cash financing is becoming the norm.”

In line with this, the channels for delivering the product are also changing. In the past it meant meeting the customer, but now multi-channel or omni-channel is becoming the norm. It is therefore not surprising that even globally, those who started with brick and mortar presence add a digital layer, and those who were purely digital make a physical presence.

New cost equations

Finally, she says, “the cost of delivering the product has dropped drastically while the cost of customer acquisition had increased significantly as we now face customers with many choices.”

The key really lay in becoming more agile and trying to reinvent quickly in this evolutionary process.

Looking back on the three decades she spent at ICICI and eight months since she moved to Aditya Birla Capital, she says, “we have here a whole range of financial products under our umbrella – we have NBFCs, which do lending, we have housing, life insurance, health insurance, we have mutual funds and stockbroking and so on, and each of these entities has done very well” but it was about curating products to meet the specific needs of the customer.

Elaborating on the changing consumer expectations and the necessary agile manufacturer responses, she explains, “when it comes to the customer, who has a completely different profile than what was the case in the past, and who is also looking for a device that can provide a complete solution for the requirements he or she had to have.

This could be, she said, “what we call, PIFA (Protecting, Investing, Financing and Advisory), so therefore it was best for the customer not to have to deal with five different companies (entities) and just act over one platform.”

So, what then could be the mantra for success, as it were, in this next era of consumerism? “We understand the customer better, get to look at our products from the customer’s lens instead of looking at the customer from a product lens because the product’s needs can change with age. And to be able to do this and also offer the full range of products is really the flexibility the customer needs . In such a format, you can not only make your existing products available, but can also continue to add. Therefore,” she says, “what we see today is this complete change in approach.”

Data replaces security

If data will come to replace security, Mulye feels that it is already happening. “If you look at the check-out financing that we do or BNPL (buy now, pay later), it is completely unsecured and we do not take any security for this. A lot of times, if you look at the whole of supply chain finance, which I’m extremely optimistic about. As Aditya Birla Capital, we are launching our B2B platform.”

In supply chain finance, she explains, “if you can catch the money moving – a large company and its downstream suppliers you can catch the money moving and therefore see that cash flow (the whole cycle of working capital) and be able to capture it well then need you not a security. The whole revolution that has happened in the country with the GST data. Earlier it was very difficult to go and assess whether the accounts really represented a true picture. Now, with the GST data and with the consent of the customer, you can draw the customer’s balance sheet and P&L. Security is necessary when the client is moving up and leading to liquidation, but why wait for that? So, yes,” she says, “data is replacing security, and as data becomes more enriched, newer models will emerge and your own experience will be further refined.Even today most of the personal loans are unsecured.If someone has 700 plus CIBIL score or new to credit, it is better to take a personal loan than a security loan because the difference in return is almost 2 or 3 percent.

The road to profitability

On the road ahead and the immediate concerns, she says, “we want fintech to succeed, scale up and go on the road to profitability, which is still not well articulated yet.” She also reminds, “this is no longer a nascent industry and we, for example at Aditya Birla Capital, are already working with 21 fintechs.”