Scaling Recurring Payments: Digio

Scaling Recurring Payments

.4 min Read

Piramal Capital & Housing Finance Limited (referred to as Piramal Finance), achieved best-in-class eMandate success rate of 93%, and reinforced its position as a customer-focused leader in India’s NBFC-HFC segment.

PCHFL’s collaborative excellence with Digio in building a best-in-class NACH stack and improving success rates from 84% to 93%

Introduction

Piramal Capital & Housing Finance Limited (referred to as Piramal Finance), a wholly owned subsidiary of Piramal Enterprises Limited (flagship company of the Piramal Group), is a leading Non-Banking Financial Company - Housing Finance Company (NBFC-HFC) engaged in retail and wholesale lending.

In retail lending, Piramal Capital & Housing Finance Limited (or PCHFL) focuses on addressing the diverse financing needs of the under-served and unserved populations in India’s ‘Bharat’ market, comprising Tier II and Tier III cities. With over 1.3 million active customers and a robust presence across 26 states, PCHFL delivers innovative financial products, including home loans, loans against property, and small business loans.

To effectively serve these regions, an efficient payment collection system is paramount. Recurring interest repayments are a crucial component of lending businesses, facilitated primarily through the National Automated Clearing House (NACH), an NPCI offering that automates recurring financial transactions.

However, like many in the industry, PCHFL faced inefficiencies with existing NACH processes, such as lower-than-ideal transaction success rates, high operational costs, and customer dissatisfaction. Addressing these issues was critical to fulfilling its commitment to deliver a superior experience for its customers.

The Challenge

Before the collaboration between PCHFL and Digio to co-develop an industry-best payment collection stack, PCHFL’s biggest problem statement —

Low NACH success rate

PCHFL delivered a mandate registration (recurring payment setup) success rate of 84%, caused majorly by a cumbersome customer journey involving multiple steps towards setup completion, leading to non-success at 16%.

Solution Deployment

PCHFL, in close collaboration with Digio’s technical team, developed a robust and customizable solution designed to increase the NACH success rate.

Customer intuitive assistance with platform configurability

- PCHFL and Digio teams deep-dived into the reasons for mandate registration failures and developed platform intelligence to empower the customer towards journey completion in self-serve mode
- Real-time user notification: Comprehension of the various errors received from NPCI was done, and an intuitive customer notification mechanism was developed to establish a clear line of communication for customers towards journey completion.

Smart payment mode recommendation

- PCHFL and Digio formulated a mechanism to ascertain real-time success rate comparison across various payment modes. Modes with the highest success rates were pushed while those with lower probability of success were discouraged.

NACH Mandate Streamlining

The mandate registration process was re-engineered for efficiency and simplicity. Prior to this, customers were required to complete several verification steps, leading to delays and drop-offs.

The new process eliminated redundant steps and improved user experience, leading to a significant reduction in failed mandates.
A fully automated mandate verification system was put in place, reducing human intervention and speeding up the process.

Pre-Digio Mandate Registration Journey

Post-Digio Mandate Registration Journey

Post-Digio UPI Mandate Registration Journey

System Integration

Digio’s NACH platform was integrated seamlessly with PCHFL’s existing loan management and payment processing systems. The integration was designed to ensure:

Real-time Data Exchange: Through API integration, mandates and transactions were synchronized in real-time between the NACH system and PCHFL’s back-office systems, ensuring immediate updates on transaction statuses.
Scalability: Designed to handle increased volume of transactions, the solution accommodated rapid growth in PCHFL’s customer base without compromising performance.

Results and Key Performance Metrics

The combination of PCHFL’s in-house intelligence frameworks and Digio’s best-in-class mandate stack led to a major transformation across several key performance indicators (KPIs), with a significant improvement in the NACH success rate from 84% to 93%, exceeding the target of 92% and leading to a reduction in instances requiring manual intervention by operations and disbursement teams.

Conclusion

The partnership between PCHFL and Digio has set a new benchmark for efficiency and innovation in the financial services sector. The tailored NACH mandate solution not only transformed the recurring payment collection process but also demonstrated the power of user-intuitive digital solutions combined with automation and scalability. By achieving a best-in-class eMandate success rate of 93%, PCHFL has reinforced its position as a customer-focused leader in India’s NBFC-HFC segment.

Key Takeaway

Financial institutions looking to scale in India’s sub-urban markets can significantly improve payment collection outcomes by focusing on simplified, user-intuitive digital solutions, backed by user empathy, robust integrations, automation, and smart solutions.

The success achieved by PCHFL and Digio highlights the transformative potential of well-designed digital solutions in enhancing customer experiences and operational efficiency in the financial services sector.

PCHFL’s Future Outlook

Building on this successful collaboration with Digio, PCHFL is poised to explore deeper integration with other payment channels, such as Aadhaar-based mandates, and expand its offerings across additional loan products. This collaboration underscores the importance of leveraging digital transformation to drive operational excellence and customer satisfaction in India’s growing financial landscape.