“Dear Amit, we’re sad to know that you applied for a job with our competitor, Acme Online. But you’re a valued member of our team. So we’re increasing your salary by 25%. And throwing in an extra week of paid leave annually. Love, HR.”
How did your company’s HR come to know about you having applied to a rival company? You didn’t tell a soul. Not your spouse, not your BFF, not your folks.
Were they monitoring your emails? Listening in on your phone calls? Checking your increased frequency of LinkedIn updates?
None of the above (though they could). Instead, the job site through which you applied did. Through its scarcely advertised product called Employee Watch. Which popped up the following alert on your HR manager’s screen:
“Dear HR, your employee Amit just applied for a job with Acme Online.”
We made that up. Job sites would never do that. But credit bureaus might.
Especially if those credit bureaus are named TransUnion CIBIL. With about 90% share of India’s credit bureau market, CIBIL has an interesting product called CIBIL Watch to help banks and lending institutions keep tabs on their customers.
CIBIL Watch is a real-time alert product that helps lender A know instantly if one of its customers is applying for a loan with lender B. CIBIL intimates lenders via a pop-up message if one of their borrowers is over-borrowing or is likely to turn into a defaulter. What started out as a nifty risk-mitigation tool, has, over two years, become something else in the hands of CIBIL and lenders like Bajaj Finance, HDFC Bank, Yes Bank, Kotak Mahindra Bank—a sales tool.
Risk mitigation to sales maximisation
One of the biggest users of CIBIL Watch is Bajaj Finance—among the country’s largest non-banking financial companies (NBFC). Its ability to sell multiple loans to each one of its borrowers is noteworthy. Interestingly, Bajaj has been looking for a senior manager, who will be in charge of CIBIL Watch, for a while now. It wants to use this channel as a “significant force multiplier to cross-sell products.”
Banks and NBFCs have five channels to reach customers. Through sales agents, telecallers, aggregators like BankBazaar and PaisaBazaar, and through their own branches and digital channels. On average, lenders spend as much as 2% of the loan amount to acquire a new borrower. But for channels like CIBIL Watch, it’s only about leveraging existing channels. It rides on the lender’s ability to act fast, have the flexibility to tailor-make products on the fly, and offer better pricing to lure borrowers.
“The volume of leads coming through CIBIL Watch is sizeable. For lenders like Bajaj, 15% of their monthly business comes from it,” said a senior lending executive.
Conversions of this magnitude are making other banks sit up. Yes Bank even built a channel around Watch called Yes Express in 2017. Neeraj Dhawan, chief risk officer – retail banking at Yes Bank, said that the conversion he sees through this is off the charts. “We initially put less than 5% of our customers on the Watch and are now increasing that number by 20% every month.”
The cost of acquisition, he shared, is on an average 25% that of any other digital channel while conversion is 400-500% higher. “We reach out to customers within an hour with pre-filled details of their application, and that’s a wow-factor for them,” said Dhawan.
Incumbents of the world, unite. Against disruption
For the last 15 years that credit bureaus have been around, banks and Non-Banking Financial Companies (NBFCs) were mandated by the Reserve Bank of India to supply the data on their borrowers to credit bureaus. As a result, credit bureaus have the financial gossip on everybody in town. Who skipped a credit card repayment, who has how many debts, who is a good borrower, a bad borrower.
So much so that bureaus like CIBIL know a lender’s customer better than the lender; the bureau has the borrowing record of a person, across all instruments and all financial institutions, in one place. So every financial institution takes its credit underwriting decision based on the bureau’s dirt on that user.
CIBIL is the largest of the bureaus, with about 90% market share, holding data on about 1 billion credit records of 555 million borrowers.