Scaling to serve the needs of low-income households
Bengaluru, India
At a Glance
• Supported growth of 20-30% in the last 5 years
• Customer retention of 88%, among the highest in the industry
• Processes 90,000 loan applications and 3-4m transactions every day
• New customer onboarding cut from 20 days to less than a week
• 11,000 new customer applications accepted every day
• Core banking upgrade stabilized in less than one month vs six months previously
• New feature releases enabled twice monthly
CreditAccess Grameen is India’s largest microfinance institution. It has 4.6m customers and manages assets of over $2.7bn. It employs 19,200 people across nearly 1,900 branches nationwide. Its mission is to be the preferred financial partner for low-income, rural households who lack access to traditional credit, with women making up more than 99.99% of its customer base. It offers a range of microfinance loan products, including for business capital, home improvements, family welfare and emergencies.
Adapting to local challenges
Relatively low levels of financial and digital literacy are a big challenge for India, says Sudesh Puthran, CreditAccess Grameen’s CTO. Alongside this, there is a lack of available credit history for people and a diverse mix of 20–25 native languages to cater to. That explains why CreditAccess Grameen employs a vast network of branches nationwide. “We don’t have English-speaking people sitting in our central office managing each village. Instead, we employ local people to work in each village. That fosters a greater relationship between the customer and us.”
A lack of internet connectivity is another issue that CreditAccess Grameen has had to overcome. “We have designed systems that allow our managers to process loan applications offline when connectivity is unstable and then flush these into our core banking platform when access is back up.”
Customer-centric innovation
Fixing these challenges is the reason why CreditAccess Grameen has become the number one microfinance institution in India and is now more than twice the size of its nearest competitor. “We have designed products suitable for our customers’ situations. We understand that their reality and needs are different from urban customers, and so they need a different approach. Unlike in the city, rural populations don’t tend to get a regular monthly salary. They might get income on a weekly or daily basis, so we align our repayment schedules accordingly.”
“We don’t straight-jacket our products and expect customers to adapt to them. Instead, we take time to understand their requirements and build the necessary customizations in our core banking platform. So we have gone from having a few products to having a plethora suiting everyone’s individual needs.”
Sudesh Puthran, CTO at CreditAccess Grameen
Low-cost growth
The approach works. CreditAccess Grameen’s annual survey of its customers has seen a steady uptick in satisfaction levels, with over 98% customers being satisfied with our service delivery. This has driven customer retention rates of 88%. That is coupled with relatively low running costs, achieved by running an agile, lightweight, and automated operation. “We are able to manage annual growth of around 20-30% in the last five years without exponentially increasing headcount, including expansion into the northern states.” These efficiencies are then passed onto the customer in the form of the lowest interest rates in the market.
Pioneering technology
Since 2015 CreditAccess Grameen has used Temenos core banking to drive efficiencies. Prior to that, it relied on the integration of multiple open-source legacy solutions, which proved challenging in terms of sustainability, support and data integrity. It was the first microfinance company in India to understand the benefits of deploying a core banking platform and was attracted to Temenos because of its specific capabilities for microfinance. “By leapfrogging onto Temenos’ core banking platform, we put all our issues to rest immediately.”
Customizability and scalability
Customizability has been a major gain. “We can offer our customers all sorts of tailored solutions. For example, flexible repayments (that align with a customer’s income cycle), loan moratoriums necessitated during the COVID-19 pandemic, the ability to perform regulatory obligations like interest subvention by the government during COVID-19 and specific state public holidays have all been easy to configure.” With ready-made lending products also accessible via the Temenos platform, such as automotive or gold-backed loans, CreditAccess Grameen has been able to significantly fasten its time-to-market for new products.
Scalability was the other reason behind CreditAccess Grameen’s decision to choose Temenos.
“We process up to 90,000 loan applications every day, some as low as $12 equivalent, and 3-4 million daily transactions, so we need to have a very stable and a robust, high-performing core banking platform to deal with that sort of volume. Today, we are able to keep the business up all the time with close to zero downtimes.”
Sudesh Puthran, CTO at CreditAccess Grameen
One outcome has been the time to onboard new customers, which has been cut from 7-15 days to less than a week since the process was digitized and automated. With around 11,000 new customer applications being accepted every day, the efficiency savings are amplified.
Expert execution
Recently, CreditAccess Grameen has doubled down on its partnership with Temenos. It has extended its Temenos environment to Madura Micro Finance, a business it acquired; and it has upgraded to the latest version of Temenos core banking, working with Nagarro (a Temenos partner) on the implementation. “Nagarro and Temenos were great experiences overall. We had extremely strong support from Temenos to ensure the implementation went smoothly. They understood that engagement with our end business users is really important and that ongoing testing is critical to success. They were key features of both projects.”
As a result, the upgrade was considered stable after just a month from switch-on. Previously, this would take at least six months, says Sudesh. “There was hardly any downtime and we didn’t see a dip in business volume beyond 2-3 weeks, which can normally be for much more period with upgrades.”
This efficiency is carried through to new feature releases and software updates, which are enabled twice monthly. “Having a core banking platform encourages us to make these changes frequently, and keeps our business aligned with our customers’ needs.”
Deeper ties
Looking to the near future, the API architecture of the Temenos core banking platform will support CreditAccess Grameen as it moves into open banking, explains Sudesh. “The fact that we have the Temenos core banking platform will give us an edge to comply with the open API framework.” Other areas of exploration include data lifecycle management, data analytics, data lake, and Temenos Banking Cloud.
“Temenos continues to be at the heart of our business.It is much more than a technology. We have a great rapport with Temenos. They are sensitive to our needs and our timeframes. They add value with every capability they provide.”
Sudesh Puthran, CTO at CreditAccess Grameen
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