Sasidhar Thumuluri, MD & CEO Sub-K IMPACT Solutions: “AI can be a huge game-changer for financial inclusion particularly”

We’re always pleased to talk to people driving technological change, but even more so when what they’re doing is trying to drive cultural change too. That’s exactly the case for Sasidhar Thumuluri, MD & CEO of Sub-K IMPACT Solutions, who realised that technology could democratise access to finance over 20 years ago.

“My earliest experiment with tech goes back to 2001 when we tried to use hand-held terminals in microfinance operations at BASIX, my first employer and parent company of Sub-K,” Sasidhar told us. “Those were the days when mobile phones were not in vogue, and smartphone was not even a word.”

For our younger readers, we can tell you that back in 2001 there was no such thing as ubiquitous internet access, with most people still relying on slow, dial-up connections on computers while mobile phones were only just becoming mainstream. To a varying extent, this was true around the world, including in Sasidhar’s native India.

Despite this, he explains, “Sub-K was conceived as a digital native company and did a lot of work with mobile technology applications to solve financial access, especially in rural and remote India. Thus, my engagement and fascination with digital technologies dates back more than two decades and is only growing with time!”

With so much experience – see below for the briefest of overviews – Sasidhar regularly speaks at national and international forums. He was also a member of B20 Task Force on Financial Inclusion under the India G20 Presidency and is currently a member of Financial Infrastructure Task Force in Brazil.

Our thanks to Sasidhar for answering our questions in such depth, and for giving us such an excellent insight into the work he and Sub-K IMPACT do.

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Could you please introduce yourself to our audience and share how you ended up working in fintech?

I am Sasi Thumuluri, CEO of Sub-K IMPACT Solutions, an inclusion-focussed Indian fintech offering credit, banking and payment solutions to the underserved low-income segment.

I have been working in the financial inclusion space for about 25 years and have always been curious about the potential of technology in solving societal problems, particularly in improving access to finance by the masses. My earliest experiment with tech goes back to 2001 when we tried to use hand-held terminals in microfinance operations at BASIX, my first employer and parent company of Sub-K.

Those were the days when mobile phones were not in vogue, and smartphone was not even a word. We went on to try smart cards and mobile ATMs as well around that time. Internet was a rarity then. Clearly it was ahead of the time, but there was no doubt in our minds that technology can be a game-changer and one should be prepared for disruption.

I have been deeply influenced by the work and vision of Vijay Mahajan, BASIX founder, since the early days of my early career. Vijay was able to visualise how technology can disrupt businesses and would be a huge enabler for innovation and scale. Sub-K was conceived as a digital native company and did a lot of work with mobile technology applications to solve financial access, especially in rural and remote India. Thus, my engagement and fascination with digital technologies dates back more than two decades and is only growing with time!

What do you think traditional finance and banking companies can learn from disruptors in the fintech space?

Fintech disrupters are demonstrating the power of digital technologies in personalising services, customising products/processes and building to exponential scale. Traditional companies have been able to leverage technology effectively in improving process efficiencies and standardising the services, but what they fell short of is designing for purpose, in other words, customisation. Standardisation has its benefits which were reaped well to an extent.

However, high standardisation misses out on fast-emerging opportunities such as aspirational low-income customers who have a diverse set of financial needs, women customers who were not considered important in standard models, netizens who are an emerging new class etc. These are large and growing segments. Traditional companies could learn to adopt agility in their processes and adaptability in their services. Fintech disruptors are challenging everything we have done thus far in banking and financial services.

To a large extent, the market has been supply-driven leaving out many from the financial system as they did not fit the bill. Fintechs are turning the traditional businesses on their heads. Customers love them because the products and services are designed to their needs. With AI coming of age, the products can be hyper-personalisand demand-driven. Traditional banks and financial institutions must learn this art and embrace the change, or partner with fintechs to stay ahead of the curve.

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In what ways is artificial intelligence impacting the fintech sector?

Artificial Intelligence (AI) is the key factor in making fintechs successful. The availability of data from multiple sources made it possible to understand customer profiles and preferences in a better manner. Machine learning tools have allowed us to predict customer behaviour and underwrite risk more precisely. Deep learning aids in curating services and creating customer delight. Generative AI has the unlimited potential to interpret all kinds of unstructured data and create highly personalised customer experiences.

Services that used to require human intervention, which in my view is a friction point, can now be delivered frictionless digitally, thanks to AI. Traditional data, primarily credit bureau records have so far been the basis of underwriting credit risk. This limits access to those who already have it, excluding those who don’t. Traditional systems were inherently exclusive in nature. Data and AI change all that. Non-traditional data sources such as telecom usage, phone usage, location stats, online buying, social media, bill payments etc., have assumed more importance than credit bureaus with fintech players exploiting these sources in creating credit profiles of customers more precisely than ever. Something that required repeated manual checks and long-drawn workflows has now transformed into AI-driven automation and quick processing times.

AI allows for providing a human-like experience but with greater speed and precision. AI can be a huge game-changer for financial inclusion particularly. With better access to customer insights and deeper mobile connectivity, the barriers to financial access can be broken down forever, flattening the world for all.

What are some of the biggest regulatory challenges affecting the fintech sector?

I believe regulation is catching up with time. Instead of viewing regulation as a challenge, I would consider it a party to the innovation ecosystem. While we innovate and disrupt, it is crucial that we engage with regulators continuously through proper channels such as sandboxes, consultation workshops, policy dialogues, advocacy etc. The key consideration with respect to regulation is usually the trade-off between customer protection vs innovation. Knowingly or unknowingly, innovation collides with conventions, and it is a learning curve for everyone. It is critical for fintech innovators to keep in mind customers’ interests. Everyone must operate within the prevailing regulatory regime while engaging with regulators to make necessary amendments. Over-regulation slows down innovation.

In my field, since the customers are less literate with limited digital exposure, they are usually unaware of how their data is being used, what they are signing up for, and how to choose between convenience versus safety. Hence it becomes even more sensitive from a regulatory standpoint. With increasing cybersecurity risks, fintech firms are vulnerable to data breaches which can cause untold damage to customers. GDPR is considered the gold standard for regulators to devise policies around customer protection in financial services. India has just passed the Digital Personal Data Protection Act 2023 which would define future regulation for fintechs here.  

How does your company differ from its direct competitors in the fintech space?

Sub-K is a digitally native company that has adopted tech innovation in financial inclusion much before the ecosystem was ready. We are primarily a last-mile delivery company that is customer-facing and enables banks and large financial institutions to acquire a share in the mass market, in turn making financial services accessible to the underserved.

Our direct competitors today are microfinance institutions (MFIs). Unlike a traditional MFI, the operating model we have adopted is highly scalable, capital-light and risk-controlled. With human-centric design at the core, we offer convenience and flexibility to customers in an industry that is known for hyper-standardisation and rule-based systems. The prevailing practice adopted by MFIs is high-touch, opaque, rigid and largely mono-product, leaving minimal room for customers to express their will.

We have reimagined the microlending model in a digital environment wherein customers are segmented based on risk profile and digital readiness and offered need-based assistance rather than painting everyone with the same brush. Video technology is extensively used to make the system fully transparent. AI tools such as ML algorithms and computer vision are applied to assess the risk and customise services remotely. Repayments have been largely digitised with the majority of customers adopting online options rather than cash. Customer engagement is intensified and curated based on repayment behaviour and digital maturity. Cross-selling is being enabled to provide product choices to meet their life cycle needs more effectively.

All this is being done through a customer-facing application that is first-of-its-kind in the industry. The capex light operating model coupled with the state-of-the-art digital platform makes Sub-K the fastest growing micro-fintech in India today.

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What are your top three fintech predictions for the upcoming years?

First, I think there will be increasing pressure to marry profitability with growth. Until now investments went largely to models with exponential customer acquisition potential on the promise of data and digital. Some of these models are beginning to crack with no profitability in sight. Going forward, I believe the bets will be higher on founders and leaders who are a bit seasoned in financial services rather than those who just understand tech. The business of money is a bit more nuanced than algo-based risk models.

Second, customer connection is still an important ingredient in financial services since the situations change every day. Fintech innovators should find ways to stay in touch with customers and predict the next move creatively without intruding on their privacy. The models that rely too much on sensitive customer data will be challenged. There will be pressure to adjust AI tools to ensure ethical practices and avoid biases in profiling.

Third, with growing digital adoption across board, embedded finance and cross-selling would be a big opportunity. The focus would be on lifecycle financial needs rather than a one-size-fits-all approach. Platforms that offer configurability and customisation will likely capture greater traction.

Which fintech sectors do you believe are prime for investment in 2025 and beyond?

I firmly believe that the growth potential of financial services at the bottom of the pyramid is yet to be explored. With the demonstration of clear benefits by the likes of Sub-K, I think investments will start flowing in for innovative models in this domain. The power of technology in disrupting this market is immense and investors should look at this opportunity more seriously.

Secondly, micro-insurance is probably an area the investors would be looking at closely. The sheer market gap and potential for acquiring customers profitably at scale digitally can be an attractive proposition.

Thirdly, lending models based on payment trails are beginning to pique investor interest. In India, UPI has transformed the payment landscape. Credit-on-UPI is an area to watch out for. This in my mind is a low-hanging fruit, especially for the payment aggregators who have already garnered massive data riding on UPI rails.

What advice do you have for aspiring professionals wanting to work in fintech?

I would encourage aspiring professionals to consider working in the financial inclusion space. Given the size of the addressable market, the opportunity is immense. There is an urgent need for talent and innovation. Traditional models have been too slow in making universal financial inclusion a reality. Fintech has a chance to expedite the same. There is a huge gap in credit, insurance and investments in emerging markets. AI shows big promise. With increasing mobile and internet usage including in deep rural areas, the opportunity to disrupt and reinvent operating models is high.