Inside HDFC Credila’s Tech-Driven Quest to Simplify Education Financing

The education loan sector in India is experiencing substantial growth, driven by evolving financial needs and innovative solutions. According to CRISIL Ratings, the education loan assets under management (AUM) for non-banking financial companies (NBFCs) are projected to increase by over 35% to around ₹35,000 crore this fiscal year. This surge is fueled by specialized business models, the rise of NBFCs and fintech companies, and a growing acceptance of education loans among Indian students and their families, as highlighted by Propelld. In a conversation with Minu Sirsalewala, Executive Editor at Dataquest, Manjeet Bijlani, CFO of HDFC Credila, discusses how the company is at the forefront of this transformation. By leveraging advanced technology such as cloud-based solutions and artificial intelligence, HDFC Credila is streamlining loan processes, enhancing customer experiences, and maintaining a competitive edge in a rapidly evolving market.

Could you elaborate on the current state of the education loan sector in India? Are there any specific challenges students and institutions face when it comes to loan management?

The burgeoning middle class with the youth aspiring for higher studies both within and outside India offers a very large opportunity to education loan financiers like HDFC Credila. Along with opportunities come challenges in the form of increased competition from banks and NBFCs entering the education loan market and customers spoilt for choice and self-financing still constitutes a significant component of the overall spending on education.

As education costs have been rising there has been a shift in demand and even families who can afford prefer to take small loans to inculcate a sense of financial responsibility in their wards providing growth potential for the education loan product offerings.

With advancements like AI and cloud solutions, how do you envision the education loan sector evolving in the next five years, and how will these technologies impact both students and institutions?

Cloud-based solutions score on multiple counts namely flexibility, scalability, accessibility, and disaster recovery to name a few. The expensive set-up of infrastructure comprising of data centres, DRP, and maintenance has been eliminated and the time to market for onboarding new digital solutions has significantly reduced. Increasingly, new age technologies including traditional ones like Oracle have migrated to Software as a Service (SaaS) models and Credila too has pivoted its entire technology stack on the cloud and reaping aforesaid benefits of cloud-based solutions with cost optimisation and building a decision support system focused technology stack.

Credila has developed a bespoke LOS platform which leverages the power of AI by providing a seamless customer onboarding journey and auto-populate most of the customer data from bank account statements, KYC documents etc. which has reduced the TATs as data entry and associated errors is eliminated enabling focussed and qualitative analysis of student demographics and credit appraisal.

Currently, the Company is not leveraging on machine learning but there is a potential use case wherein borrowers with a good credit profile meeting specific criteria can be green channelled with light touch underwriting.  

HDFC Credila has undertaken significant digital transformation efforts. Could you outline the primary objectives behind these digital initiatives, particularly focusing on enhancing operational efficiency and financial scalability?

HDFC Credila had embarked on the journey of Digital transformation in 2020 and COVID-19, accelerated the need to transition from a physical model of delivery to a phygital model. In phase one of the project the Company onboarded SaaS solutions like video KYC, e-signatures and e-stamping, of loan documents etc. whereby customers could complete the entire process from home, without walking to our premises and the disbursement too were concluded electronically.

In Phase 2 we have revamped our complete tech stack and have migrated all our applications on AWS Cloud. We have developed a bespoke inhouse Loan Origination System (LOS) based on a microservices architecture where the customer onboarding is a self-assisted journey right from application for an education loan, choice of services wished to be availed, submission of documents, CKYC etc. everything is on a single platform.

Just as one can place and track food order status on Zomato our new LOS service pretty much offers the same level of transparency to customers and they can track the status of their application as it passes through various stages of QC, Operations Review, Credit Appraisal all the way to the Sanction Letter with the Key Fact Statements on the commercials of the loan. 

We have also onboarded a customised Loan Management System (LMS) which handles the entire life cycle journey of the borrowers from the disbursement of loan, moratorium, servicing of EMIs, repayments, prepayments, SOAs, account closure etc. The Company has successfully rolled out the LOS and LMS as an integrated package at its Mumbai location and is slated to complete the PAN India roll out by Q3FY25.

Can you discuss the specific innovations within the finance function at HDFC Credila and the driving forces behind these innovations?

We've transitioned from Oracle EBS to Oracle Fusion and our treasury operations from a homegrown legacy system to Capital Cube developed by Intellect Design Systems. the financial reporting has become seamless with the product offering exceptional integration capabilities with our Loan Management System, Treasury Systems, Banking gateways etc. We're also into the process of automating our ALM reporting and Expected Credit Loss (ECL) models under the IND AS framework  which were previously managed through extensive Excel based reporting templates.

Can you discuss the influence of your partnership with Oracle on your organization's financial management strategies and decision-making processes? Have you observed any improvements in areas like financial reporting, forecasting, and operational efficiency? Can you share specific examples?

Adoption of Oracle Fusion Cloud ERP has been transformative as the financial reporting has become seamless with the product offering exceptional integration capabilities with our Loan Management System, Treasury Systems, Banking gateways etc. With Oracle Fusion, we recalibrated the entire chart of accounts and cost centre hierarchy, enabling a robust review of the costs and financial performance.  The Company also migrated its legacy Oracle ERM database to Fusion Analytics Warehouse (FAW) enabling multiyear financial analysis. Quantitatively, we've reduced the cycle time for closing financial statements during month end from seven to five days.

We are exploring multiple solutions with Oracle including automation of channel partner payouts and procure to payment solutions which will further reduce the financial closure timelines.

Looking ahead, what are your plans for unlocking the future of financial success at HDFC Credila? How will technology play a role in achieving these goals at HDFC Credila?

With rising enrolment in higher education and vocational training, supportive government policies and focussed efforts for enhancing financial literacy among potential borrowers HDFC Credila is poised for robust growth ahead. Our new technology stack with customer centricity at its core will play a significant role in delivering best in class services to its customers and potentially provide education loans within a day and offer allied products like credit cover, travel and health insurance, forex services etc. at click of a button. The next phase of technology transformation will focus on optimising the customer experience by leveraging AI/ML capabilities which will assist in analysing customer data profiles across multiple parameters and aid in enhanced scorecard-based underwriting. Our continuous innovations on technology front are aimed at providing a open architecture market place for all services required for higher education under one roof providing us an competitive edge. 

Read more:

Syrma SGS poised for continued growth and innovation in EMS: Satendra Singh

BenQ creating healthier learning environments: Rajeev Singh