Reliance is placing significant bet on AI to drive its consumer finance business

Reliance Group-owned Jio Financial Services (JFS) is planning a startup business strategy led by veteran banker KV Kamath. The plan will be backed by artificial intelligence (AI) and a digital focus to effectively compete on costs. Despite being a late-comer in the business, JFS officials believe that the use of technology and data will enable them to target a significant number of middle-class and low-middle-class consumers in both urban and rural areas by utilizing existing Reliance centers and Jio World Centres as touchpoints.

The financial institution is relying on Kamath's extensive experience in establishing ICICI and will develop a plan similar to Jio's telecommunications business. Kamath has been given the freedom to create his own strategy, supported by talent, technology, and capital. The main difference between starting a financial services business in the past and now is the abundance of data available for informed decision-making, thanks to technology.

Jio has recently announced a partnership with investment giant BlackRock to establish an asset management firm, which is an area where Bajaj is a relatively new player. Jio Financial Services will operate different business verticals, each headed by a CEO. During his last visit to India a few weeks ago, Larry Fink, CEO of BlackRock, discussed the plan with Mukesh Ambani and Kamath. Hitesh Sethia, CEO of Jio Financial Services, is also a former ICICI Bank executive with 22 years of domestic and international experience in corporate banking. In addition, Group CHRO Manish Singh is also a former ICICI employee.

a tech team is working on developing AI that can match investors with investment products based on their risk appetite. They have access to a consumer data mine and will also leverage technology intelligence from BlackRock. While bots are already being used in some of their other businesses, the extent to which AI can be utilized in this context is still being explored. Jio Financial Services declined to comment.

Consumer finance has come a long way due to the widespread availability of data. In the past, building a consumer finance business required establishing a physical distribution network. Nowadays, technology and data have made it easier to disrupt the industry. Lenders now have the ability to view customers in a different light thanks to the account aggregator and Aadhaar framework. Data that was previously only available to banks can now be accessed by other companies, which could be a game changer. A partner at a top consultancy firm stated that Reliance has decided to avoid expensive acquisition-led plans and is instead opting for joint venture partners to avoid legacy issues.

Reliance expects that higher consumption and digitalization will fuel its growth. It plans to achieve this through a smartphone-led, online usage of commerce and services. The company will now offer personal loans through the MyJio app in Mumbai, and consumer durable loans across 300 stores. Additionally, it plans to launch business and merchant loans for self-employed individuals, sole proprietors, and small business entities, auto loans, home loans, and loans against shares. Experts believe that Reliance can leverage its deep pockets, strong partnerships, and the best of technology to cut costs. However, in the end, financial services rely on attracting the best talent and ensuring effective risk management.