The
client is a leading Swiss Wealth Management firm
focused on providing financial advice, high end
services and expertise to private clients.
The client had reached out to us for assistance in the
operational activities of portfolio management,
revenue verification and reconciliation.

• Identified process gaps and mitigated them by
  introducing further checks and balances
• Identified revenue leakage of INR 30 million and
  recovered the same

Our client is operating in India since 1964, has a well-established
track record in the local financial markets.
Incorporated in the US, the bank offers a
comprehensive suite of financial products including
lending, working capital, treasury and trade services,
foreign exchange, and interest rates to leading Indian
corporates, financial institutions, multinationals, and
foreign government entities.

Our client wanted to seek professional assistance in
handling Account Payable (AP) process and stay
compliant with the GST – Input Tax Credit (ITC)
regulations defined by the revenue authorities.

• Reduction in error rate and achieved accuracy level
  of 99.7%
• Input credit that was not claimed earlier; is now
  availed by the client contributing additional
  cash flow
• Operational weaknesses were identified and
  strengthened by plugging the gaps
• Automation of processes resulted in increased
  efficiency and effectiveness

The client appointed Nexdigm (SKP) to take charge of the CFO office and handle all reporting regulations after the reinsurance regulations in India were liberalized which led them to open a branch in the country.

While there was a lack of local F&A team, the regulatory landscape also kept evolving. India moved to the GST regime at the same time when Insurance Regulatory and Development Authority (IRDA) evolved the insurance regulations for reinsurance branches. Moreover, the accounting systems were not in place to provide the required reporting as per the Indian regulations and/or Indian GAAP, thereby adding to the complexities.

Nexdigm (SKP) deployed an experienced team to handle their complete F&A responsibilities like –

• Integrating their global accounting system with Indian GAAP
  Our client’s systems and sub-systems were based on either the US-GAAP or Swiss GAAP. We assisted them in identifying the differences between these GAAPs and Indian GAAP and implementing them in the system so as to allow automated Indian GAAP reporting. This resulted in reduction of the reporting TATs by at least 60%.
• Assisting the implementation of new Indirect tax regime of GST
  While the implementation was done by a different consultant, we provided inputs in terms of reporting and system dependencies since we acquired an in-depth experience of their accounting systems. This allowed the client in identifying the system issues early in the implementation phase.
• Closing the first-year audit of the branch
  We assisted our client in selection of joint-auditor, preparation of the first year financial statements, liaise with the auditors and finally closing the audit. One of the critical matters in the auditing process was the revenue recognition. Insurance sector in India has always been recognizing revenue which is primarily based on the Bordereaux. Internationally, lot of estimations are built in while recognizing revenue. In our client’s case, since this was only two months of operations, majority of the revenue recognized were based on estimates.We not only anticipated this to be an audit-issue at an early stage, but also created documentation to comfort the auditors.
• Representing the entity to IRDA and RBI for the evolving re-insurance branch compliances
  Since this was the first time that India opened doors for foreign reinsurance branches, reinsurance regulations were still in process. Our team played a key role in preparation representations to IRDA for modifications in the draft regulations.
• Designing Finance SOPs
  Our team helped the client in designing SOPs and implementing them in a challenging set up phase. This involved adopting the global practices of the client and modifying them to suit the Indian needs.
• Representing India office in their Global SAP implementation project
  Our client was implementing SAP S4 HANA at a global level. One of the countries in this project was India. Our team not only provided the business user and local needs but also participated in the global workshop representing the India office.
• Day-to-day F&A activities & Reporting to the global team/ APAC CFO
  Our team also assisted the client in various day-to-day activities like reporting compliances to IRDA, Income tax department, RBI and other statutory authorities; carrying out day-to-day AP management, etc. Our team directly reported to APAC CFO with a dotted lien reporting to the Global Finance team. This helped our client in conducting business as usual while there was a regulatory uncertainty.

Nexdigm (SKP) deployed an experienced team to handle their complete F&A responsibilities. We set up their accounting systems for reporting from US GAAP to Indian GAAP in record time and provided comprehensive support with respect to the F&A function including designing SOPs, reporting to global and APAC teams, etc.

Nexdigm (SKP) also represented the India office in the global SAP implementation project. Our contribution even extended to representations to the IRDAI in drafting reinsurance regulations.

Our support in the set-up phase ensured that the business ran seamlessly, without any non-compliance risk for the client. We were entrusted with key decisions, implementation of systems and processes, and audits in India.

The client – a group of investors – had lost their principal equity investments due to secondary market trading losses (derivatives and equity segment). The investments of the group were being managed by a wealth management firm. The investors believed that the statement of profits/loss provided by the wealth management company was inconsistent and wanted to conduct an independent investigation.

The information available with the customer was limited, leading to overall transactional trends across investors, customer balances and instruction communication on investments.

We conducted an analysis to evaluate indications of foul play on the part of the wealth advisor and any diligence lapses on the part of investors.

We thoroughly investigated all information available and we were able to consolidate evidences in the nature of documentation inconsistencies, transactional trends, key exceptions, timeline of events and related evidences in the form of a report for legal counsel’s consideration.

Nexdigm (SKP) conducted an analysis to evaluate indications of foul play on the part of the wealth advisor and any diligence lapses on the part of investors. We investigated all the information available and we were able to consolidate evidences in the nature of documentation inconsistencies, transactional trends, key exceptions and timeline of events.

We noticed uninformed investment/liquidation of equity shares retained as a margin by the wealth advisor. Nexdign (SKP) also found inconsistent trends of derivative investments, including transactions not being aligned to active market trades and indications of uninstructed investments on behalf of the investors. Our findings were extensively documented and presented for the Legal Counsel’s consideration.

Collection, a critical function for every NBFC, was identified as a problem area in the Client’s processes. The client faced approx. 10% dishonored monthly EMI payments and leading the collection process became expensive without significant results. The client wanted to execute improvement and optimization of their processes to increase collections while minimizing the costs of the same.

• High representation bounce rate
  Each payee with a bounced payment was given second chance to make the payment, a process technically termed representation. 90% of these attempts defaulted again, leading to heavy wastage of representation cost and efforts.
• High cost of collection
  Collecting default payments is a resource-intensive job, which made it costly. Moreover, the field collection team couldn’t carry out the collection functions during the representation period, i.e. the first half of the month, bringing down the productivity significantly.
  Nexdigm (SKP) was mandated to explore opportunities to address these challenges through process optimization using data-driven analytics.

Through our initial assessment and discussions with the business teams, we identified three major focus areas- effective customer engagement, improved field team productivity, and optimization of the collection process. After a detailed analysis, we converted these focus areas into two specific problem statements:

1. Representation Process Optimization
2. Effective Customer Engagement

Representation Process Optimization

• The existing representation process
  • Was spread over 14 days, impacting the productivity of the collection team.
  • Needed a lot of manual data consolidation with the involvement of multiple teams
  • Automated filtration of cases was missing, which led to low realization rates and high cost of representation.
• Solution designed
  • Developed Machine Learning (ML) backed predictive models for more filtered representation.
  • 70% of 10% dishonored payments were filtered out based on the above model and directly forwarded to the next step, saving time and representation cost. This also reduced the idle time of the field collection team and increased their productivity to almost double.

Effective Customer Engagement

• Existing process
  • The customer database had inconsistent and incorrect details limiting contact with them. The defaulters who could have been engaged with and reached out to before the EMI due dates.
  • SMS campaigns did not impact the outcome because of carpet bombing marketing approach and incorrect data.
• Solution designed
  • Developed a communication strategy backed by Predictive Behavior Models to intervene before the due date. This avoided the unintended defaults in payments and controlled future delinquencies.
  • Mapped communication channels (voice blast, tele-calling and SMS) basis the customer profile. This led to a reduction in the burden on the field collection team since a number of clients responded to the first round of communication itself.
  • Implemented database improvement initiatives.
  • Identified patterns of response by customers to multiple mode and tone of communication. This impacted customer behavior positively and brought down unintended defaults

We built machine learning models in sequence, to predict the cases to be filtered via the representation process vis-à-vis the cases to be closed through reminders by using 15 years of data and nearly 5 billion data points.

Based on our model, only 30% of the default cases were sent to representation, thereby reducing the cost of representation by around 70%. We also managed to reduce the turn-around time of the representation process by 21%, through process optimization.