Dynamic Duo — 87 / Investing in the Future

The world around us is changing rapidly and technologies are disrupting the industry. In such a fast-changing world, the banking and insurance sector is undergoing a sea-change. Although AI and Machine Learning is easing the lives of customers, the human connect is still needed, says Vineet Patni, Investor, Advisory to Boards. Vineet believes that technology is here to help get things done in a more efficient way and not to eliminate the workforce. But staying relevant is the key. In an interview with Corporate Citizen, Vineet sheds light on why traditional banks are here to stay but will have to adopt new ways, what problems startups face today and how startups will be the driving force behind the country’s economy...

“I started to enjoy being with smaller and younger organisations which are disrupting the space through innovation, new technologies and ideas. Being an angel investor, I am invested and working closely on six sectors. What I really enjoy doing is meeting young entrepreneurs and helping them to grow”

Tell us about your education and career journey.

I am an Electronics Engineer from Nagpur University. Post which, I did my Post Graduation in Marketing and Finance from Symbiosis Centre for Management and Human Resources Development, Pune (SCMHRD). I am a Gold Medallist from SCMHRD.

I started my career journey in 1995, with a leading NBFC as Head of Business in corporate banking. I continued to work in both sectors, banking and insurance. Working in various markets, my expertise grew in starting businesses and transforming organisations. I was known as a startup specialist and then grew to focus on turning around businesses. I worked for global and leading corporations like Allianz, AXA, Commercial International Bank, Commercial International Life, Mashreq Bank, National Bank of Oman. I had the opportunity to travel around the world due to my work-I have worked in ten countries around the globe.

I have been in leadership roles or equivalent of President/CXO, Business Head and Executive committee member working with the Board. My last corporate role was President - Chief Institutional Business Officer, Bajaj Allianz, Pune; I was a founding member of the same organisation in 2001 and a key member while the JV was being formed in India.

I have been thinking of being on my own for the last 15 years but finally decided to give it a go about two years back. I started to enjoy being with smaller and younger organisations, which are disrupting the space through innovation, new technologies and ideas. Being an angel investor, I am invested and working closely on six sectors. I travel 20 days a month through Asia, India and sometimes across Europe. What I really enjoy doing is meeting young entrepreneurs and helping them to grow. I do consult and guide leading firms, I am a shareholder, board member, advisor to companies in various markets which include India, Singapore, UAE, Netherlands, US, Canada and Africa.

What role do you play as an angel investor / advisor?

I focus on the area of healthcare as I truly believe a lot needs to be done to solve current growing challenges with lifestyle diseases. The areas include digital health, fintech, futuristic technologies and insurance. I do help companies grow global and focus on result-oriented consulting. I am also a Charter Member at TiE, which is the largest entrepreneur association, and I was the Chair for TiECon Pune 2019 and now Chair for FutureTech 2019. As a part of my career journey, I did get involved with governments in policy formulation and regulatory framework.

What challenges do you come across in your role and how do you resolve them?

Life is filled with opportunities, every time you go through any challenge, the real rush is in bouncing back. Learning, adapting and staying relevant is the name of the game, whether it is changing business or technology or having the right skill set. There will be challenges on the way, but the ability to hold on and stay focused, I think, is what really works. When you work all over the world, you realise that the challenges are both similar and different, but it is your ability to get a grip of that and move forward, which is essential.

How different are banking practices in india as compared to overseas?

Disruption in the banking sector and fintech is now significant. Slowly and gradually we are realising that the practices are similar but segments are different, challenges are different and due to globalisation best practices are moving from one part of the world to another. If you look at the Indian scenario right now, we are seeing a huge meltdown in the finance sector. Some of the large banks are struggling; PSU banks are facing difficulties, mergers have been announced by the Ministry of Finance. The mass market is really evolving. In some of the global markets, there is a significant movement happening in fintech companies. We will start to see a lot more of that. There are technology companies which are trying to disrupt the banking space but there is clearly a convergence of things which will start to get things together. More and more companies are interested in becoming local companies rather than global companies. That is the key change that is happening.

Earlier, people used to go to banks like Citibank or HSBC or someone else. Today, we are happy with banks like ICICI, HDFC and so on. Local banks are improving themselves, small banks in India are evolving-like Jeevan, Janlakshmi, Utkarsh and many more. There are significant changes happening in the Indian fintech sector.

As far as PSU bank mergers are concerned, merging cultures will be the difficult part and at some time disinvestment may be the focus. I hope there are no job losses in the process and banks can expand and create employment opportunities.

“People from all age groups are getting into startups. I have seen people from the age group of 40 also getting into startups and also students who are in college. Even Reliance Jio is a startup; the only thing is that it is not being run by a millennial”

What will be the future trends in the banking sector?

We are moving towards open banking, open platform and open architecture. Face to face selling is evolving and changing continuously. Technology is becoming a part of every day. Customer behavior is changing considerably, where clients today are happy using digital medium and tools to acquire a product.

Earlier, people used to visit banks and carry out transactions through conventional methods. Now, people are very happy to sit at home and get their transactions done by an app, no need to stand in queues. Due to technology, processes are carried out faster than what used to happen earlier. Therefore, there is a significant shift in the buying behavior of a customer and how transactions are carried out in banks. If you look at India specifically, due to demonetisation, though leading banks are having a rough time, there were so many other players like payment banks who entered the market, which in turn has changed the payment ecosystem and caused a disruption. People use various tools to do transactions instead of carrying cash, which provides opportunities for technology companies to play, which makes everything much more convenient and easy for our customers. I think that a lot will evolve, moving forward. Product simplification, as well as differentiation, is something that will happen and that will really drive the change as things progress in the future.

Moving to the area of healthcare india is largely an in-patient country. Will it match up to the usa, where a majority of the people are out-patients, in terms of numbers? Will the mindset change?

Absolutely, India not only will match up but will move very fast. Healthcare is clearly a concern, which is growing day by day in the country. India is the diabetes capital of the world, we have maximum diabetics. We have the largest number of cardiac patients in the world. Cancer is also becoming a huge concern for India.

India is now largely an in-patient country and it will definitely change. In a few years down the line, you will see a significant shift. Even if you look at the mass market-the ‘Ayshuman Bharat Yojana’, which was launched by Prime Minister Modi, is one of the largest healthcare schemes in the world-I think it will evolve and get better. Healthcare costs now are not very affordable. They should be affordable and treatment should be easily available to almost every citizen of the country.

In the near future, you will see the healthcare system in the country totally different from what it is today. One of the biggest problems is that healthcare expenses are going up, doctor charges are going up, the facilities that are available now are way less than what people can afford. Today, affordability of treatment is a huge issue; the cost of someone getting treated is so high that there are people who end up selling houses, properties for the treatments. I don’t think that’s the right way moving forward for a country like India. I am sure we will end up having solutions for such situations.

Will AI and Machine Learning create a disruption in the banking and insurance sectors? Will it reduce the human touch?

AI and Machine Learning will definitely create a disruption. It is already happening. But I cannot say with certainty that yes, human interaction will go down significantly due to the disruption caused by AI and Machine Learning. With more and more technology coming in, I am also seeing that people are looking for human interactions. For instance, when you make a call, you would want to speak to a human being instead of a recorded message, you need that connect. AI and Machine Learning are improving the processes, improving the pace, getting the speed right. For example take Uber; earlier, we would wait for a taxi; today, we do the same on an app. The car is still driven by a driver, you expect to get honest pricing and it is available instantly. AI and data analytics are involved at the back-end to decide what should be the correct price from point A to point B. Earlier, the AI was the driver himself, he used to decide the pricing or you would have a fare chart, in which the rates were fixed.

Now the time required to pay claims is a few hours. Or take the case of companies like Lemonade, based in the US, where you can take a selfie and get an insurance policy. You know the age of the person based on his picture. There is a lot happening now. Many new things are coming in. Blockchain is starting to make claim processes easier. Data is now a powerful tool.

Should banks use big data analytics to provide customised banking services?

Yes, absolutely, because one size does not fit all, customer behaviors are different, the needs are different and with the help of technology, you can personalise it. Life becomes much easier due to technologies because your ability to train one sales guy to sell 40 products is way more complex, but if the sales guy knows which product is for which customer and what is the right time to make a sale, you can make it much easier. Technology can do it, you can make it customised.

In terms of percentage, globally this is a challenge, it is not that India is behind per se but I would say that we are in the phase of disruption, and I would not be shocked to see India leading. A lot of best practices from India will go overseas. We have reached a stage where India is already starting to move forward and what’s happening in India will decide what will happen outside India rather than what is happening here. There are many disruptions and there are many instances happening today where India is teaching the globe rather than the other way round. The world is becoming an open platform, open ecosystem and the best practices are moving from A to B.

Let’s not forget that the Indian market is fairly different, the mass segment is fairly large. The needs are different, we are still a savings economy. People do believe in savings rather than spending and social security is significantly lower than many other places in the world, where if you don’t have a job or you are unwell, the government comes and helps.

What are your thoughts on today’s startup scenario in india?

Startups have multiple problems. The first problem is the raising of funds which continues to be a huge issue. Secondly, we still do not have many startups which are futuristic or innovation-driven. Though we are solving problems, we haven’t seen a Tesla or an Apple or Google in the making, or anything else so far, or which is completely disruptive of how things are. There are multiple startups coming in to solve problems. We have got a fairly strong ecosystem of incubators and accelerators coming in, but the challenge we have is that they are not being mentored, guided or built properly to help startups. To be honest, we are significantly behind in some of the areas. If you have to compare where Silicon Valley is and where we are now, we are significantly behind. If you look at where Israel is, they are significantly ahead on innovation and are trying to do things whether it is in agri-tech area or any other. If we look at Pune, Pune is clearly leading in the auto tech, agri-tech and edu-tech sectors. Pune has three unicorns, billion-dollar companies, Dhruva Systems, FirstCry and Icertis; India has about 25.

“The education system itself is going through a disruption. Today, it is no longer about a student being relevant but the person delivering the session has to be relevant too. The teacher needs to understand the mindset of the students”

Are only millennials interested in starting a startup?

People from all age groups are getting into startups. I have seen people from the age group of 40 also getting into startups and also students who are in college get into startups. Even Reliance Jio is a startup, the only thing is that it is not being run by a millennial. It is a startup because it disrupted the telecom industry in the country when it came in.

In the earlier days, having a job was a priority, now, in the world of startups, has this mindset changed?

For a significant group, the mindset is still the same, which is important, as financial security and regular income are necessary to pay for expenses. Though with the sharing economy, ownership trends have changed and will change further. But I do clearly see, many youngsters from leading institutions are keen to join startups or start one, they also end up raising the capital quickly and they start to grow. Most schools and colleges are establishing entrepreneurship cells to bring this as part of grooming early.

What advice would you give to students who would want to enter the finance sector?

My only advice would be that finance is one of the sectors undergoing significant disruption and jobs are shrinking. It is one of the sectors where companies are under tremendous stress. There will be many jobs coming in. But the new-age jobs will be different from the current ones-bank managers of PSUs will be replaced by someone totally different. You would not have branches with 40-50 people. Many PSU banks are being merged. You have various changes happening. In that scenario, new-age jobs will make a difference. In a couple of quarters from now, this could be booming and most sought after sector.

What kinds of challenges do you face while dealing with millennials?

It is very interesting because I am not sure whether they faced challenges dealing with me or I faced challenges dealing with them. The generation gap is definitely there but the last few years went in terms of understanding and working with them. Understanding them is a challenge but once you start to understand them, it is fun to work with millennials. I do enjoy working with them. I don’t see an issue, there is a lot to learn from them. They are a smart set of kids and clearly driven to shape the future.

Will the advent of new-age banking setups like payment banks replace traditional banks?

Traditional banks will continue to rule the world. They are not going to go away. Open banking is going to be there, that means data would be available to almost everyone. The huge change that will happen is that old-age banks will actually become nimble, agile and fast. Old-age banks will behave like startups and they will have to keep up with new-age banks to survive. Not only will the old-age banks have to keep up but they will also have to change their traditional processes significantly. Now there are companies willing to give you loans on the basis of your social media posts. There are various companies doing such things. You have loan approvals happening within 45 seconds to one minute. PSUs will have to holistically change themselves to beat the competition. Look at the mortgage space today, there are companies willing to give housing loans of 3-6 lakhs to someone who doesn’t have a salary statement or even to a tea vendor. How does this happen? It is because of disruption, data is in a play and companies are trying to understand his daily earning. They are willing to take a risk by giving him a loan.

With self-driving cars entering the market, will the insurance sector be affected?

Yes, they will disrupt the insurance sector. Also, with the likes of Uber and Ola, motor vehicle insurance may not be the largest sector in the world. The motor insurance sector will change with self-driving cars and cars becoming safe, will in-turn reduce the number of accidents, therefore the need for insurance will reduce. The industry is aware and when that happens, motor vehicle insurance may not be the largest business but the smallest insurance business.

Is there a gap between what students are groomed for and what the industry needs?

Yes, definitely there is a gap; the gap is only increasing and not decreasing. The education system itself is going through a disruption. Today, it is no longer about a student being relevant but the person delivering the session has to be relevant too. The teacher needs to understand the mindset of the students and adapt to it accordingly. Teachers should be able to understand the thought processes while dealing with a millennial.

Tell us about your hobbies.

I am an avid reader of current market trends. I track news closely, and I like to play golf. I enjoy most to work with startups. I work 14 hours a day. Every Sunday I meet my new startups and help them. That is my way of giving back.

What is the philosophy of life that you live by?

Work hard. One thing my father always told me was that no one died of working, people died of not working. Work hard and life will be okay. Be honest and be truthful. Keep learning and be relevant to the changing times. If you are static then you will not move forward in life.

Art For the heart Banking for the soul

“Detail-oriented, focused, hardworking and independent. In short, a lady who gets the job done” is how her husband of 23 years describes his hugely accomplished better half. A woman of few words, she weighs each one for merit and meaning much like she analyses the risk profile of the borrower. Senior Consultant, Credit Risk, Banking & Fintech, she is nevertheless both an artist and avid art collector.

At the core of it is a commitment to give back to rural art and craft so that craftsmen are able to sustain themselves. Despite the premise of her role-objectively analysing the capacity of a borrower to repay a loan-she believes that banking at the end of the day, has a role to fulfil in reaching out to those who truly need them. It is with this social conscience that she stresses the need for the saving habit to come back even in a credit happy economy as India is today. Over to Sharmila Patni

First things, first. surrounded as we are by such evocative beauty in your living room, please tell us what is it that motivates you to collect the art.

Sharmila: The stories behind the art! Not to forget the number of hands it has passed through-the more the hands, the richer the back story. So I have this thing for Vintage Art. I look around for things that interest methat’s how I got my period furniture and other artifacts in the room. Take this huge, circular table for instance, it was in a shambles, no one really wanted it. I had it restored and see how beautiful it looks.

Being an artist myself, I appreciate what goes into creating a thing of beauty. At the same time, one wants to give back to the rural economy, support livelihoods and encourage artisans. It is something that guides me in all that I do. Even after completing my MBA, when I was asked as to what I wanted to do, my answer was simple: give back to the rural areas so they don’t need to move to already overcrowded cities and may sustain where they are.

This painting of the Whirling Dervishes that you have made is evidently a work of love. What does art do for you?

Sharmila: Well, the sheer fun and joy of creating something and watching slowly acquire form and shape is deeply satisfying. I first started painting while we were in Cairo, Egypt. Cairo’s big on art and I took it up.

Can you tell us how the two of you met?

Vineet: We first met during our engineering days. She was quite an academically inclined person, way better than me in studies. (laughs)

What were the qualities that attracted you to her?

Vineet: She’s hard-working, focused, determined. Hugely independent. A lady to dares to take the road less taken and gets the job done. A woman of few words, as compared to me but someone who still manages to express herself well.

You’ve been married 23 years. What would you like to tell us about the institution of marriage?

Sharmila and Vineet: It works if you are able to pull on as a team in the challenging faces. That is the true test of a marriage. Sure, we have our ups and downs but in the difficult phases, we are one plus one equals eleven. Together, we are very good, compensating for each other’s shortcomings. Isn’t that what marriage is supposed to be about?

“Being an artist myself, I appreciate what goes into creating a thing of beauty. At the same time, one wants to give back to the rural economy, support livelihoods and encourage artisans. It is something that guides me in all that I do”

You’re a credit risk professional. Would you please explain to our readers what that means.

Sharmila: Simply put, a credit risk professional studies and analyses the risk profile of the borrower. When somebody comes to you for a loan you look at certain documents, study their financial portfolio, income, past track records or repayment and so on.

From being regional manager, Credit risk management services, Citigroup, in the early 2000s, you undertook a training programme with the Grameen Bank aided by World Bank, a project in Dacca, Bangladesh. Wasn’t that a major shift in terms of reorienting your thoughts and approach?

Sharmila: It was, to be sure. At Citibank, one had certain criteria on the basis of how much and to whom one was supposed to lend. But with Grameen Bank-the brainchild of Nobel Laureate Muhammad Yunus, the one criteria was to reach out the poorest of poor. The pitiable thing about Bangladesh is that the Brahmaputra is quite the river of sorrow in that region, flooding and destroying everything in its wake. The most vulnerable are the poor people who must then start from zero. And here’s where they need the help and support of the banks. In this grim backdrop, human hope has a way of making an entry when you need it the most, especially in the form of a very beautiful concept and exercise called group lending. Here’s how it works. Supposing five women friends approach the bank. Each one needs a loan for whatever her enterprise is: basket weaving, buying a cow or tending to chickens. The mainstay of the group lending project is that each one vouches for the other and if for some reason, one of them can’t pay, the others fill in and make the group’s payment for the month. Whatever happens, the group can’t be allowed to go down.

There are incentives for those who pay back on time or sooner. Most motivated of all are the group leaders who follow the discipline of weekly collections. This exercise gives the poorest of the poor the much needed social and moral support to pay back loans. I learnt a lot from the experience. It is a wonderful way of supporting cottage industry or kutir udyogs and something that’s come in a significant way in India as well. Micro-finance, as we call it, is a very important aspect of welfare banking.

To speak of the economy and the important role played by banking in ensuring we didn’t go the us way during the slump of 2008-thanks to the checks and balances in place. so are we in a good place? This question assumes pertinence, especially in the face of the millennial generation and the fact that 50 per cent of our population is under 35.

Sharmila: Things are changing and how! India has traditionally never been a borrowing economy. Middle-class India largely frowned upon the habit and it wasn’t seen as a good thing. I remember the time when as a young working professional I had an uncle visit me. So impressed was he with my new Wagon R that he decided to buy a new car himself. When he called me up to share the news, the first thing he added was...“I took not a farthing from the bank.”

That sense of pride in not borrowing is obviously on its way out. This generation is pre-dominantly a loan economy. They don’t want to commit to cars or buy a house. Everything is on a sharing or rent basis. As a result, there are few savings at the end of the day.

There is a paradigm shift in family dynamics. Everyone is earning, everyone is spending. All through the year at that. There are organisations that are studying your spending patterns and offering you to take new loans and buy. We are taking EMIS to pay EMIS. Waste and ostentation are the name of the game. An aunt of mine asked me a basic question the other day with regard to the practice of Sarvajanik Ganpati pujan in Pune. She asked, “Do we, really need so many Ganpatis”? Why can’t we just have four-one for each direction-North, East, West and South? Why the need for so many? It simply adds to the pollution. A similar thing is true for private celebrations. In yesteryears, one person would be happy to host the rest during festivals. Now, each one wants to have their own do and have things their way. It is this culture of excess that is worrying.

“The sense of pride in not borrowing is obviously on its way out. This generation is pre-dominantly a loan economy. They don’t want to commit to cars or buy a house. Everything is on a sharing or rent basis. As a result, there are few savings at the end of the day. There is a paradigm shift in family dynamics. Everyone is earning, everyone is spending”

An indian banking professional from the us commented that we were going the american way, when really, given our culture we ought to know better....

Sharmila: We are throwing the money and worse, showing them the money they didn’t earn! Youngsters are learning what they shouldn’t. My generation started borrowing to save taxes like those on the housing loan. But now, it’s the curse of too much. On top of it, families are increasingly getting separated, living in different cities due to work or education. Divorce is a big thing. When a young couple split up, they can’t pay the EMIs on a property they have bought together. We are facing the curse of consumerism.

So how do we bring back the saving habit?

Sharmila: Well, there are ways and means to do it. For instance, in the West, Richard Thaler came up with this project called “Nudge”-something that asked people if they would like to set aside a modest amount as saving or insurance over and above their EMIS. In India, we had Syndicate Bank do it through agents who would tap the financial backbone of households-namely the women for savings. So well did this project work that quite a few people were able to marry their daughters off. Given the tech-savvy times we live in, we could have APPS reminding people to save. The saving could be coupled on with spending like the cashback concept on cards if all this cashback for the individuals various expenses like a Uber ride or a bus ride and grocery spends or Amazon spends are tracked and combined and invested in an ETF it will be this spare cash not expected which will go as saving. Also there could be goal-based investments, it could be short term goals like going on a holiday buying a camera paying for your hobby classes and so on. The habit of saving needs to be reintroduced and what better way than educating our school and college kids with this. Start early and save big. This will go a long way in reducing the stress on the system.

The economy, it seems, is slowing down. CrisiL is now projecting the growth of the indian economy at just five per cent.

Sharmila: Yes, and there are several factors that have added to it. The auto slump for one. Investors are wary about where things are headed given the focus on electric cars. Given that the vast majority of the cars on the road as of now are not electric, it is going to require a huge reorientation and some downtime to retraining the present force. What’s more, the sheer suddenness of certain decisions like the demonetisation, took us aback. It ought to have happened in phases. Even something like GST, which worked out very well eventually, took its time in the initial days. People were very confused as to what to do but once they were given the ropes, they managed to pull themselves up. Upskilling our workforce is very important in this slowdown. Who knew what Paytm is and what a QR code is but look at the financial inclusion that has happened with this. It is a gradual change from cash to cashless economy but it has the ripple effect of saving too. I was talking to an Uber driver who said with cash we didn’t know where it was getting spend it was difficult to track but now we know where we are spending and how much we are saving.

“We are going to see some more mergers in the days to come. Despite the challenges, they entail in terms of the streamlining of data and cultural differences, without cutting back on jobs they have to be done. We just have too many banks. For the government too, it is easy to help one bank”

What is the buzzword in the world of banking as of now?

Sharmila: Fin-tech. Financial technology, often shortened to fintech, is the technology and innovation that aims to compete with traditional financial methods in the delivery of financial services. It is an emerging industry that uses technology to improve activities in finance. The government is waking up to its possibilities. Technology will help the banks keep a tab on their portfolio and thus, in turn, avoid these huge NPA’s. What technology will do is set a system to override which is very difficult so less scope for human intervention. Like a smart contract in Blockchain.

The recent merger of 4 important banks - Bank of india, Canara, Syndicate and Bank of Baroda is the talk of the town...

Sharmila: Yes, and we are going to see some more mergers in the days to come. Despite the challenges, they entail in terms of the streamlining of data and cultural differences, without cutting back on jobs they have to be done. We just have too many banks. For the government too, it is easy to help one bank, instead of more than one. The challenge of NPAs is real and has to be tackled head-on. People need to be upskilled and trained to work in the same capacity to be more productive.

Working as a credit professional must also have introduced you to the positive side of the human spirit. What is it that motivates you?

Sharmila: Oh, absolutely. The quest of people to overcome is just amazing. It is their grit and never say die approach that motivates you as a banker. Let me give you an example. When I was working with Citibank, I had someone walk into my bank asking for a loan for a JCB (earth-moving equipment.) Now looking at him, I doubt one would be encouraged to give him a loan. But appearances can be deceptive. He had a proper plan in mind as to how he was going to pay off his liabilities, how much he would earn in the days to come and by when he would able to pack back. I went through his previous track record-the payments were staggered, not quite on the mark. They were falling into our delay pattern. But he was positive he would be able to pay us back, offering us one machine as collateral and enough down-payment. You would not believe it, he repaid us within eight to nine months. His spirit was just terrific.

How would you define yourself beyond work?

Sharmila: I am a learner. I am forever wanting to try my hands at different things. From painting and collecting art to learning a language like Arabic and German. I also learnt swimming, squash recently. That’s been on my bucket list for long. I also enjoy pets particularly my cat Kitta. She was someone who walked into our home and stayed during our stint in Cairo and came with us to India. Animals teach you a lot in their own way, particularly compassion.

Could you sum up your personal philosophy?

Sharmila (smiling): Live in the moment. It’s all about Here and Now. One life give it some meaning.

By KaLyani sarDesai