How standardized debt recovery led to remarkable gains for an Indian NBFC

A large non-banking financial company, renowned for its role in the consumer finance and commercial lending space was looking to improve its vendor verification processes and develop risk mitigation strategies. Given the increasing workload, the company’s current manual processes strived to meet the desired standard and timeframes. This necessitated a structured vendor verification protocol that would help safeguard the company’s pristine image.

They envisioned a platform that would effortlessly pinpoint trusted vendors, automate tedious tasks to drastically reduce errors, expedite turnaround times, and bring consistency to their auction procedures.  The company sought a transformation in its debt recovery strategy, aiming to navigate the process seamlessly while avoiding potential risks. Recognizing the need for a reliable partner to create a comprehensive tech-driven solution for the entire recovery process,  the company turned to EY. 

EY's history of tailoring automation solutions to meet specific business needs solidified its position as the ideal partner for this undertaking.

Understanding the needs of the company, EY embarked upon a journey to curate a debt recovery solution that would not only simplify vendor selection, but also enhance third-party risk management and carry due diligence for the business.

EY recognized the need for a comprehensive debt recovery solution streamlined the process and also upheld the highest standards of efficiency, security, and compliance. With these goals in mind, EY meticulously curated a multifaceted approach, breaking down their solution into three core areas: vendor onboarding and due diligence, automated notice sending, and an integrated auction platform. 

The debt recovery solution was developed with the following objectives:

1. Easing vendor selection
2. Third-party risk management and due diligence
3. Real time monitoring of KPIs with dashboards and display screens
4. Scalability
5. Cloud-native architecture
6. Compliance and security
7. Automation of time-consuming and error-prone tasks
8. One-stop platform for auction needs

The solution was divided into three core areas: Vendor onboarding and due diligence, automated notice sending, and integrated auction platform. EY worked closely to understand the potential risks of the NBFC’s association with debt recovery agencies that were not aligned with the company’s ethos. These parameters were then embedded into the solution to flag off dubious third parties right in the initial stages. The idea was to enhance foundational third-party components through three key stages:

1. Achieve faster decision-making with pre-screening
2. Glean accurate information with end-to-end workflow management
3. Commission custom due diligence investigations

EY’s digital solution revolutionized the way  the NBFC onboarded debt recovery agencies. With a structured process, they are now more in control of whom they want to liaise with after a thorough assessment of their work ethics and conducting comprehensive due diligence. An interactive dashboard has enabled them to have complete visibility over key performance indicators and make decisions that are in line with the analysis. This also led them to effectively manage gaps that were preventing vendors from being onboarded effectively. Automating the issuance of notices allowed teams to have the time to focus their energies on strategic activities, helping them contribute better to the company’s success. The structured bidding module framework has changed the way the NBFC conducts auctions. 

By reducing manual intervention, minimizing errors, and optimizing resource utilization, EY’s customized and fully scalable technology solution not only empowered the NBFC to standardize its debt recovery process but also onboard multiple types of vendors while achieving cost savings, enhanced turnaround time, and a competitive advantage in the market. 

The dynamic technology solution developed by EY helped automate the management and disbursal of legal notices thereby strengthening the recovery process. The RPA-based process can generate up to 10,000 notices per hour with customized templates to address different needs as per the recovery stage. It provides real-time status through integration with SMS platforms and India Post, making the process of sending notices faster and more seamless.

Figure 1: Agency/vendor onboarding process:

EY Centralized Bidding Module framework acts as a focal point of information and is shared with participating valuation agencies and auction houses through APIs. The four stages of the CBM framework are:

1. Asset Valuation reconciliation
2. Publishing Auction Event
3. Bid Comparison & Allocation
4. Payment Reconciliation

Figure 2: Centralized Bidding Module framework

Time taken for payment reconciliation before EY’s intervention 15 days and following : EY’s intervention real-time.