VolkSoft: Powering Microfinance, Inclusive Finance and beyond

Srinivas Thouta, Srinivasa Rao Byrisetty, Raju Vuppala & Shashikanth Maidhampally,Co-Founders & DirectorVolkSoft has this rare demonstrated ability to straddle the worlds of both software product and custom built application development, but with an emphasis on the former. It is very rare for a company to have excelled on both fronts, but the DNA of its founders provides some vital clues to their enduring success, and their seamless ability to build cutting edge products by mastering new domains, starting with edutech, later transitioning to stock exchange solutions and now for the last 8+ years in the Inclusive Finance sector.

Having started their careers in the realm of building and implementing enterprise-class software products for stock exchanges, risk management systems for real-time surveillance of trades on BSE, and broker back office systems for reputed brokerages, they carried forward this strong product ethos into their new venture VolkSoft, when they began their entrepreneurial journey more than 15 years ago.

Like any startup, they had to claw their way through their first few years, but they never let that diminish their product ethos. “We knew that we had to be a product company which means lot of sweat, investment and delayed gratification. Our first foray was into edutech for schools, colleges and universities to achieve some quick wins - there was a lot of competition and that spurred us, as competition also implies that there is a market out there to grab. Those were tough times, and we worked with almost no salaries for the first few years, but the results of that are visible today with over 1,500 schools and colleges being our customers” says Raju Vuppala, Co-founder, who leads VolkSoft’s edutech product development, outsourced product development for a stock exchange trading solution, apart from doubling up as its CFO.

With its initial success in Edutech space, VolkSoft, ‘as a company’, realized its new found strength in product engineering, and its staying power and resilience to make a product “happen” in the marketplace. “This was a crucial inflection point in our company history. It fortified us for the long haul, and as a product company, we also fine-tuned the art and science of implementation and change management. For any product that we launch, our goal is to crunch the implementation times into weeks as opposed to several months. In fact, we design our products with that intent in place, ab initio”, says Shashikanth Maidhampally (co-founder) who cut his teeth in business development and implementation of trade surveillance systems at Bombay and Kolkata Stock Exchanges, apart from leading brokerages of the day.

This set the stage for their later day foray into microfinance and inclusive finance in early 2009, starting with Bharat Financial Inclusion Ltd. (BFIL - earlier name SKS Microfinance). BFSI (Banking, Financial Services and Insurance) domain is entirely about technology, especially so with microfinance, financial inclusion, and stock markets. This is all the more true for microfinance and inclusive finance (Inclusive Finance is a catch-all term for BFSI services delivered to the base-of-the –pyramid and unbanked / unreached populations). By their very nature, these are characterized by high-touch, field-intensive, at-the-customer-doorstep delivery of products and services. Without technology, especially mobility, serving these populations at their door step would not only be grossly inefficient but operationally expensive, not to speak of high levels of transaction risk.

Serving this segment requires a highly “federated”, delegated and distributed model of operations and decision making, as the last mile is typically serviced by a rural branch, relying heavily on field officers for sourcing, onboarding and validating the customer credentials for a given loan or a product. However, in parallel, organizations also need a real-time visibility and insight into these federated and distributed operations, where the most critical activities like credit appraisal and verification happen downstream in a village or a rural branch.

For example, microfinance relies heavily on group-lending (mostly women groups), where a group provides a strong proxy for its “ability” and “intent” to repay the loan. Such a group dynamic is entirely fostered, nurtured and managed by the loan officer working from a rural branch – calling for high levels of empowerment on the field. Moreover, the medium of transaction for disbursements or collections still remains cash. All these call for a real-time visibility into the field operations and cash management, without taking away objectivity and the sense of empowerment and responsibility from these loan officers.

“Federated, Real-time, Objective, and Non-Intrusive are the four key design themes of our solution platforms MicroSure and BizXtend for this segment”, says Shashikant. VolkSoft’s solutions empower the loan officer and yet offer deep and rich real-time insights into the portfolio for its MFI, SFB, Bank/NBFC clients. Being entirely workflow based, with mobility being inherent to the solution design,loan application, credit check thru’ disbursement turn-around-times (TATs) can even be brought down to a day for a rural borrower.
“Lending business operates on a leveraged financial model, with various funding partners in play to rapidly build our customer base in rural India. You have banks and institution partners for refinancing / securitization, and outsourced BC (Business Correspondent) models where lending happens on bank’s books in a risk-sharing model. In both these direct lending and BC models, it is critical that the technology platform provides funders and bank partners with real-time visibility and drill down into their portfolios managed by us”, says Jagadish Ramadugu, co-founder and CEO of Vaya Finserv, which has rapidly grown its portfolio by over ten times in under two years.

15 Year Later When We look Back All the Dots Connect Especially Our Product Centric Engineering and Ethos

The inclusive finance sector, especially microfinance is also prone to sudden shocks, requiring quick and robust responses from the software vendor to changes on the ground - recent demonetization being one such example. This is all the more true in the outsourced BC model, where bank partners may change, or constantly seek changes to the software to deal with evolving portfolio risk contours.

“Our software engineering and robust design principles come into play even at this stage. Usually every software change is associated with long spells of software instability, crashes, regression errors. You know a good software when such changes are deployed with minimal to zero disruption to business operations. We are known for delivering complex changes to large MFIs in the shortest possible time, with no show stoppers”, avers Srinivasa Rao By risetty (co-founder) who is responsible for product design and architecture. He also heads the research and development initiatives ensuring that the products are designed and updated to the latest technological stack, avoiding the curse of obsolescence that befalls many product vendors and their customers. He adds, “most customers may not even realize the time and investments needed to keep these products ahead of the curve. For example, we started looking at Kotlin to rewrite our mobility solutions, Machine Learning for our credit engine. In fact, if your product vendor is slow in responding to changes, or if every change results in long spells of product instability, it is usually a sign of a far bigger problem - either their product design is fragile to allow critical changes, or they have a looming obsolescence issue resulting in dragging their feet to upgrade and adapt the product to the current tech reality”

Despite the setbacks of the 2010 AP Microfinance crisis, the microfinance industry in India has seen tremendous growth over the past few years. With better regulation and new slew of initiatives like Small Finance Banks, Aadhaar and India Stack, the total loan portfolio of MFIs is at an all-time high of over IRs.63,853 crore in 2016. Though the framework is more favorable than ever before, the MFIs and Business Correspondents (BCs) have to find the best leverage out of cutting-edge technologies to penetrate markets deeper and provide financial services to the underserved and unserved segment at their door step. The rural Credit-to-GDP ratio still languishes way below ten percent, whereas it should be at least fifty percent. This means pervasive mobility, robust technologies that can scale and adapt to relentless changes quickly for reaching every nook and cranny of Rural India.

Large, Fast Increasing Data Volumes - Need for ‘Reliable Engineering’
Spanning over the past 15 years, VolkSoft’s story is all about establishing a reliable product brand. This explains its success at large MFIs like BFIL. And its reliability can be attributed to its emphasis on Reliable Engineering that can handle very large, growing databases. “Given our software design and engineering moorings in stock market related applications, we have always been very comfortable in managing huge, fast growing databases. Looks can be very deceptive - this adage applies perfectly to the software world, where products are peddled and evaluated solely on a jazzy user interface. The moment you deploy them, the weaknesses in their database design start throwing up in unexpected places with unusually high frequency. Any change you seek, the vendor will go into a convulsion of sorts, as the underlying database design may not have been structured keeping extensibility or change in mind. Our database design is oriented keeping change and extensibility in mind, under high volume and real-time environments,” says, Srinivas Thouta (Co-Founder), the man who takes care of ‘under-the-hood’ engineering and database design for VolkSoft solutions like MicroSure and BizXtend, for microfinance and small business lending, respectively.

In one instance, VolkSoft’s solution has scaled seamlessly to work with mobility solutions for more than 12,000 field loan officers, supporting the loan portfolio of over 60 lac microfinance borrowers, with support for eKYC, instant credit bureau checks, on boarding, and even same day loan approvals and disbursements into the rural borrower’s account. All in an entirely paperless mode of operation. “We are now targeting banks who have the highest interest in building their microfinance portfolios in the BC model”,says Shashikanth, who is spearheading this business development drive.

VolkSoft has also built a peer lending platform. Sanjay Darbha, Founder & CEO, Finc Square testifies, "VolkSoft team’s
knowledge and experience in the inner workings of software technology is quite impressive and worth every rupee. Their attitude and enthusiasm are simply laudable, while also maintaining a fast response and turnaround time. I can say that VolkSoft is an honest group of people with highest work ethics. I think I have finally found a technology partner who can teach me things on the level I am looking for!”

VolkSoft seems to have its technology footprint on all types of lending, and related business models that cater to the base of the pyramid populations, the missing middle micro enterprises, and the unbanked and the unreached. “15 years later, when we look back, all the dots connect, especially our product centric engineering and ethos,” says Shashikanth. He concludes, “We are planning to capture a major market share and increase our presence in BFSI segment within the next 3 years, with product and pricing strategies to strengthen our position as one-stop-shop for lending to rural and unbanked India. We just unveiled a radically new pricing model for our microfinance SaaS offering, MicroSure. Stay tuned! “.

Key Management:
Srinivasa Rao Byrisetty, Founder Director & CTO
Srinivasa brings in over 21 years of experience in Microfinance, Banking and Securities Markets, and today, as an insightful leader, he heads the Research & Product Development at VolkSoft

Srinivas Thouta, Founder Director – Projects
With his 23+ years of experience in the industry, Srinivas focuses on Delivery Management in Banking & Microfinance, Database Design / Architecture and Business Intelligence & Analytics.

Raju Vuppala, Founder Director & CFO – Projects
The Financial Controller of Volksoft, Raju who brings in an experience of 22+ years, also focuses on Delivery Management in Securities Market & Education Sector.

Shashikanth Maidhampally, Founder Director – Marketing & Sales
With an industry know-how of 23+ years, Shashikanth focuses on Business Strategy, Growth Consulting, Business Development & Marketing segments.

Office: Hyderabad
Solutions for Microfinance and Small Business Lending

Outsourced Software Product Development

Custom Software Development

Technology and Change Management Consulting

Testimonial 1: “We chose VolkSoft to revamp our decade long core lending platform. Besides competitive pricing, their technical capabilities coupled with the domain knowledge on MFI space made us to choose them as our partner. I really admire their work ethics, technical skills and adoption to any situation; looking forward to a long association with them” ~Srinivas Peddada, CIO, Bharat Financial Inclusion Ltd – India’s leading MFI, now acquired by IndusInd Bank

Testimonial 2: “VolkSoft is our technology partner for Tab/mobile based Loan Origination System. We choose VolkSoft after thorough market research and proper due diligence. The team VolkSoft is very responsive and they are living up to our expectations and we are a happy customer” ~ Chandar Rao, CTO, Fincare Small Finance Bank

Testimonial 3: “After evaluating a few Vendors we decided to have VolkSoft as our Software Vendor, because of their professional approach, understanding on the Micro Finance Sector and ability to make changes to what we wanted. VolkSoft was very responsive to these changes / developments that was put forward to them. I am very satisfied with our engagement and would consider working together on future modules too. I appreciate their promptness, quality of work, IT expertise and would recommend their services.

I wanted to take a moment to thank you for the services of VolkSoft team has provided. Your team has been a pleasure to work with, professional and timely. Well done and I hope we can continue to grow together.” ~ R. Vignesh, CEO, Inditrade Microfinance Limited

Testimonial 4:"We find VolkSoft to be a very competent, customer-friendly and responsive end-to-end loan management solution provider. We like the simplicity of their pricing model, elegance of their solution and above all, their seamless ability to sit down with our business and operations users and quickly understand their needs and requirements. Their experience in the field and future plans align well with our objectives. We are glad to have VolkSoft as our partner” Sasidhar N Thumuluri, MD & CEO, Basix Sub-K I Transactions Ltd.

Testimonial 5: “It has been a half a decade long relationship for us with VolkSoft. As a group of Schools and allied Trust/Societies running these schools, we expected a tailor made solution to cover all our information capturing, handling and processing needs from a competent software solutions provider having expertise across the spectrum covering modern day tools like smartphones / tablets. VolkSoft has filled this void with aplomb. They have also been on beck and call for our varying support needs thus sharing the burden of running the complex ERP system spanning a very complex organisation. From providing the solution to managing the same, VolkSoft has been with us all along in this journey and continues to do so even as I pen this write up. ~ Rajan Iyengar, Executive Secretary and Chief Operations Officer, Sri Ma Group of Institutions.