Manish Kothari walked into the interview with an air of confidence and competence. His attitude is justified as a veteran of 20+ years in the world of commercial banking. The President and Head of Commercial Banking at Kotak Mahindra Bank sat down with us and shared his pearls of wisdom regarding financial planning and so much more.
When asked about the changing behavioral patterns of the consumers of the SME sector, Manish was quite outspoken with his opinions and views. He believed that adversity is the true test of most entrepreneurs, and the pandemic forced them to reach the heights of their hidden potential. He credits the SMEs’ agility and the government’s support for their ability to emerge stronger and victorious in the face of this global crisis. According to his observations, most SMEs learned to manage their costs better and improve the efficiency of their business, along with improving the technological interface. It is truly said, that necessity is the mother of all inventions. Manish also shared his insight with our team regarding the behavior of the customers i.e. the SMEs, during stagflation. According to him, risk management is the most important factor for all companies, especially the ones that do not possess the privilege of being a large corporation. Risk management can be accomplished through various methods. Management of liquidity during tough times is vital. One can do so by shortening their working capital cycle; which might lead to lesser margins and lower profits, but one can reduce their inventory at a faster rate and increase their profitability. Strengthening your balance sheet should also take precedence in matters of financial management.
Manish recalls the most common mistakes he has seen SMEs make during the pandemic. Some of them may seem trivial but they carry long-term consequences. According to him, the most common mistake that SMEs make is that they do not focus on their working capital cycle. They also make the error of mistaking profitability for cash flow. Manish emphasized the importance of liquidity as that is what helps a company during difficult times.
As for the youth and budding entrepreneurs, Manish talked about how company policies and practices evolve and vary according to their needs. Pure startups need to focus more on their equity as that’s their vital resource. They would either need a support system in the form of their family/friends, or they must have a really good idea to entice potential investors. A good idea, a solid business plan, and a good team are the key ingredients of a successful start-up. Manish also conveyed his belief on why start-ups fail. Their priorities are in shambles whereas they should be focused on investing in people, instead of technology. Technology may make life much easier but it shall never replace the value of people.
When asked about his career, Manish humbly conveyed how banking chose him, and not the other way around. He was extremely happy with his life with Kotak and the warm atmosphere it radiates. They have a saying inside Kotak, that they are all professional entrepreneurs.
When asked about the future landscape FOF banking, Manish had a very interesting viewpoint to share. He believes that within 20 or so years, banking would grow into a more service-oriented system, where comfort and convenience took precedence over anything else. Banking shall evolve into a different form entirely and it could potentially be entirely digital.
According to Manish, the main criterion for him regarding his financial planning, simplicity is the deciding factor. The customer should always understand what the bank is trying to sell them. One must always plan out their investments and stick to them with consistency, and the occasional review. Watch this insightful episode of Manage Wealth with Divya Tusnial with Manish Kothari on Manage Wealth Show YouTube page.
