LexTalk World Interviews Nishant Prasad. Nishant has been heading the legal and compliance team for the past 3.5 years. He has a deep understanding and expertise in laws and regulations governing wealth management in India and has immense experience in tackling critical legal issues in the sector, especially related to robo-advisory and digital wealth management services - which are the key business propositions of Scripbox.
Nishant also regularly advises on various general corporate actions and regulatory and strategic decisions for Scripbox. Nishant completed his B.A. LLB (Hons) degree from NALSAR University of Law, Hyderabad in 2015 and started his career with one of the largest law firms in India, Khaitan & Co. as a Private Equity and M&A lawyer at their Mumbai office.
Nishant is part of a small community of young Indian lawyers who have achieved great success, and have risen to a position of leading the legal practice of a company in a short span of time. Nishant has a passion for travel.
He is also an avid sports enthusiast and on any given day, in his spare time, you will find him actively involved in a game of cricket, golf or badminton.
Host: Tell us about Scripbox. What is the company’s mission, relevant facts and figures, and how it is making an impact in its local/regional/national economy or to its customers.
Nishant: Scripbox is a company which has been a pioneer in the digital wealth management space. We are probably one of the first few organisations in the country to bring about a simplified model of wealth management or launching a business model which brought about simplified investing to the customers of india. The idea behind Scripbox essentially was to simplify wealth management for people and help them on their journey to financial freedom.
So not only do we provide a digital platform for you to transact and invest easily we also offer you unbiased recommendations. We also educate and inform customers such that it enables them to achieve their investing or financial goals irrespective of the life stage they are at. So depending on what your objectives are, what your goals are, Scripbox helps you reach that goal with simple guidance, jargon free and easily accessible through a digital platform. Accessibility was something which was a sort of lacking feature in the Indian economy when we started back in 2012, so that was like one of the major mainstays of Scripbox. What we do today has evolved and we manage over around 4200 crores of wealth as Assets under Management (AUM) for customers across 2500 cities and towns and we have around 7200 customers who are rupee millionaires and that is something we are very proud of, that we have assisted our customers from starting small who have started with us in 2012-13 and probably with a 500 rupees or a thousand rupee investment and today they are millionaires, because they have trusted us and stayed with us we've helped them by providing them support and both, the customers and us, have grown in this experience. The growth with our customers is a major goal of Scripbox. We have also grown with our customers, in 2012 we started off as a simple platform purely aimed towards assisting people to invest in mutual funds online with assistance in providing a choice of the best funds for them determined by an unbiased proprietary algorithm.
Today and especially in the past year we have focused on understanding and knowing our customers’ growing needs. As customers. needs and status have evolved, they have greater expectations in terms of more products which they want to invest in, more solutions for their wealth etc. So our previous year, especially with the onset of the pandemic, has primarily gone in a lot of strategic investment of time and effort into building capabilities for supporting new financial products and we've added to our list of products. We now have insurance, international stocks, domestic stocks with many more in queue. I know we are going to be integrating with other partners soon for multiple financial products. So that impetus has really helped us to understand through straightforward conversations with and understanding our customers and we've actually grown around 3x since the last year uh in terms of AUM, so it's been a good year in terms of understanding the customer and for us to making the best of it and evolving our platform to what the customer needs.
That's what Scripbox is all about - we try to listen to the customer and provide them with the solution that they need.
Host : As a full-stack wealth manager planning to introduce a range of products and services, do you foresee any regulatory challenges moving forward?
Nishant: There will of course be challenges. Well, challenges may not be the appropriate word, maybe complexities would be the right way to define it. Complexities of providing all those solutions to customers because financial products in india are regulated by a multiplicity of regulators like SEBI, RBI, IRDAI, PFRDA, AMFI etc. Each regulator has their own set of requirements and set of processes as compliances for each product to be offered. There is also an interplay operating here between offering all these products to our customers and we have to ensure that each regulator's processes and compliances are satisfied. So I think that is the major challenge i.e. to understand the requirements of each regulator for each product and secondly, how do we enable it especially in a digital environment like Scripbox.
Another challenge we face is that most of the regulators don't really have a charted plan for a digital platform and they are evolving as. The regulators are frequently coming up with new circulars, policies and actions to maybe assist us do our business, but all things are not black and white and a lot of things are grey and we have to go with meeting the intent of the law and make sure that we are meeting the requirements of the regulator for that product when we offer online. So I think the challenge is twofold: one is to make sure that we are compliant with all the different requirements between the different regulators and secondly, on a digital platform how we enforce those compliances. We are doing well so far and we've figured out ways by speaking to regulators, we've had conversations with them to ensure that what we're doing is the right thing.
We have something called the ‘Scripbox Way’ which involves a major principle of always doing right by the customer and that of course involves being absolutely compliant with law. So while it is challenging, we make sure that we know we are always on the right side of the law at all times.
Host: Tell us about a complex legal issue you worked on. Describe the complexity and tell us how you approached it?
Nishant: I think there's one very interesting issue or you know maybe strategy is the better word actually which has required a lot of thought process. The strategy involves integrating with a lot of offline independent financial advisors. What I mean by that is that we are a digital wealth management platform and we believe in offering digital access to achieving financial freedom in India but in India we still have a lot of people who are on the traditional mode of investments. Their wealth management is done by offline advisors, through cheques or someone goes and delivers it to an AMC office and buys a mutual fund. You'll be surprised to know that a very large percentage of Indian wealth management today is still in traditional products like FDs and LIC Schemes or Post Office Schemes etc.
So what we thought is that it would be beneficial for the customer and also it will be beneficial for the traditional wealth managers and beneficial for us if we all integrate our powers together because the offline IFAs have a great human touch with the customers and they have great customer relations as they have personal relationships and they know their customers for years. This form of information and deep trust of a customer is what is absolutely valuable for a wealth manager, knowing your customer very well, to know what their needs are and that is something which to some extent sometimes customers may miss out on as an experience in a digital platform sort of lacks.
Although at Scripbox we use a hybrid model of both a human touch and a digital experience to ensure that we marry both needs but an integration between these two models of digital and traditional is a very solid proposition and a great proposition for an investor, so we thought of trying to do this and ask around assess whether this is something which traditional advisors would be interested in and we found a lot of interest and we started this process.
This process was something which was fairly new as a concept in India in terms of integrating the assets managed by those advisors and them coming on board with us in terms of an integration of the ARN numbers which is the distribution license required under Indian law.
This integration of ARN numbers involves the mapping of customers to the transferee ARN and while it's a fairly simple statement to make, it's quite a complex issue at the back end and the AMC's i.e. asset management companies which are involved, are to assist us to, make sure this mapping is or rather remapping of customers is done.
They were really not aware of how to execute this because it was not done before or may have not been done much before so the awareness of this kind of transaction or structure was not there and we had to sort of build it from scratch. So we did some research and we found a circular which had some basic instructions provided for this process and we were probably one of the very first ones to initiate the process under that circular, in the South. I can't obviously say for sure that we were the first but we were definitely one of the first few to execute this.
We had to liaise with the AMC’s and with other channel partners to ensure that all those processes are in place and there is a lot of operational work which goes behind this integration, paperwork which has gone behind this integration. These processes had to be developed in collaboration with the industry partners like the AMCs together, so we actually sat down with a bunch of partners and we decided that this is the documentation required, we sat with the compliance teams we set out and charted a process and now it's a fairly standard process and we we've done it a couple of times.
We intend to have these integrations in the future and it's become very smooth for us but at the initial stage it was quite complex and getting all partners on board with a standardized process was not an easy task and building that process, starting it out and making sure that there are no hiccups in the actual operational transfers so I think that was one complex issue which was there and it was fun post when we actually managed to do it but in the duration of setting this out I can't say it was probably a lot of fun to do it but it was a lot of effort and once we actually completed the project it is something which you know we take a pat on the back for ourselves.
Host: In the era of legal technology, what are the most commonly used tools for you?
Nishant: So one major tool which is available today for lawyers and legal teams around the world is a contract management system (CMS). It is a very basic but very important tool. At Scripbox, we don't use such a system yet, but we are on a growth path and we are seeing the need to engage a system to make sure that we have contract management in place. It would help us during diligences, fundraising in the future and similar aspects because then standard requests of list of contracts etc can be handled with ease so I think that's one of the most commonly used and effective tools which probably every organization will slowly move towards in the future.
Another aspect is the digitization of a lot of your legal work. For example, at Scripbox, we actually have a platform where we digitize our ESOP Management system, ESOP being employee stock options. So a standard general offline process would involve printing out your ESOP documentation, getting signatures on them, having one copy shared to the employee and having one copy to us - it's a lot of paperwork and a lot of waste of resources and time for somebody who's doing it. So we have a complete digital system of managing ESOPs and granting of ESOPs. It also gives a digital tracker to our employees giving great transparency to them as to how the company is doing and how their incentives are working. It's completely online and we don't even touch a piece of paper in that process, it's all digital contracts.
And when I mention digital contracts that is of course one of the major legal tools especially in the past year with Covid-19 when physical signatures and physical contracts were not possible. Everyone had to adapt to an e-contract system otherwise business functionality is at risk. E-contracts and digital signatures have seen great impetus in the last year so I think slowly we are moving towards digitization of a lot of legal tasks which are usually manual and will most definitely help in saving a lot of time for lawyers.
That is one of the key components. Also, reducing any manual or clerical errors that can happen, we are all humans and errors can happen. Digitisation and legal tools sort of eliminate that aspect. So to conclude, I think time and accuracy are two aspects which legal tools today help lawyers with.
Host: Time is money in any profession and in legal it's most of all. How do you ensure to make the best of your time as a lawyer?
Nishant: I think there are two ways I look at time:
(i) on a personal level and
(ii) at a business level.
At a personal level, and when I say personal level it means that as a lawyer, and as a matter of fact as any individual in any profession, mental health is something which is very talked about today and is really important and it's good to see that people are recognizing the importance of mental health.
Lawyers, investment bankers etc, these are professions with a heavy schedule, a lot of deadlines, a lot of transactions to be done, a lot of paperwork and so it's essential to switch off for some time and give yourself a break and come back to work in terms of personal time. Efficiency is key during your work hours and you take time off in the evening when you get off work and just log off, give yourself a good evening rest and give yourself a weekend, give yourself a vacation. I think these are very important and in fact they probably increase the productivity of anybody, so that balance is something which is very important. However it is also individualistic and depends on person to person. But the stigma that you need to sit in office through an entire day or days, I've done that before and it is not helpful or needed.
I think I function way better now when I give myself a break. However, as I said, it will depend from person to person, what works best for them.
From a business perspective, time management is different. If you ask anyone about a legal team in a company or you ask anyone about lawyers in a law firm they'll have an impression which is fairly common across everyone that “Oh my God, they're going to take so much time, they're going to negotiate and they've got to argue on this one point for five days.”
That sort of association of delay with lawyers needs to go and there's a reason why such an impression is there but I believe that especially in the Counsel side of things for a company, you want things to get done, you want transactions to get done so it's very important to be a business enabler rather than a business blocker.
Let's say if we come up with an idea tomorrow that we have to launch x product on our platform, I cannot come back and say that the regulations don't allow me to do one two three four five, which is probably what a general lawyer, if you go for advice will tell.
As a company counsel, I have to tell them what the law says and suggest measures or ways in which the product can be launched with peak compliance. I think in general lawyers need to start moving towards that zone where we enable transactions more and try and come up with solutions. But, you also have to be firm - you can't be easy if there's some things which are not allowed - they're just not allowed. Personally I can say in my company there have been couple of products which people have wanted to launch on the platform and it's been a strict no. When something is not permitted, it's not permitted right so you can't be that easy but you have to give solutions and make sure that if something can be done to solve for the issue, then you can do it and well in time
So I think in terms of time management these two aspects and balancing both is something which probably should be done.
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