Turn around: How fintechs leveraged opportunity to offer credit at lesser rates, win loyal customer pool
Updated: Nov 30, 2020 12:14 PM
Credit and Finance for MSMEs: The new-age financial framework also included the innovation of small-ticket loans, minimal documentation, easy repayment options, digitally-enabled analysis of credit score, etc. which introduced a new business opportunity to acquire such a group of customers.
With the background of the financial crisis in 2007, the banking system installed stringent measures while availing credit to consumers and businesses.
By Yogi Sadana
Credit and Finance for MSMEs: Fintech, an amalgamation of finance and technology is revolutionizing the world with disruptive innovations and has already created a major positive impact in the financial sector by increasing the penetration of credit with innovative instant and short-term credit products. It has reinvented the processes that banks and traditional financial institutions used to follow. As per the EY Global Fintech Adoption Index 2019, India’s fintech adoption has grown to 87 per cent compared to the global adoption rate of around 73 per cent. Fintech is one of the fastest-growing sectors in India in terms of employment generation and business growth. According to a report by NASSCOM, fintech software and service industry is expected to reach $45 billion by 2020, growing at a CAGR of 7.1 per cent.
India is becoming the second-largest fintech hub. Fintech was introduced to challenge the existing process in the financial segment with advanced technology which proved to be instant, transparent, secure, and cost-saving, and now factors like rapid digitalization, demonetization, lockdown due to the pandemic and also the increasing usage of internet and smartphone along with the penetration into the semi-urban and rural areas, is accelerating the customer acceptance of fintech.
With innovative products and services like real-time payments systems, mobile banking solutions, etc., fintech is not only fundamentally changing the payments system, but is also altering the lending landscape by providing easy access to credit to even new to credit and thin-file customers. The advent of fintech in the lending space has changed the perception of credit with the introduction of innovative solutions like short-term loans, instant mobile-based credit, easy and flexible EMI options, paperless documentation, and no requirement for credit score.
With fintech targeting the millennial population with its latest innovations and services, customers are more comfortable with digital technology are now moving towards mobile apps to meet their financial needs. Moreover, it has pushed them to look for services that are characterized by simplicity, ease of use, and real-time availability. Digital lenders are now geared to capitalize on this advantage by providing a quick on-boarding experience and delivering quick decisions within seconds. This is majorly attributed to their reliance on AI-driven underwriting processes and mining millions of different data points.
Through their innovative products and services, fintech companies are offering a total digital experience to their customers and revolutionizing end-to-end digital services. Their ways to use technologies to create innovative financial products, provide definite customer services, and engaging more millennials towards them. Fintech companies understand the distinctive demand for customers and have recognized the need for customer-centric solutions by offering convenience, personalization, transparency, accessibility, and ease of use to millions of their customers.
Yogi Sadana is the Founding Member of Fintech Association for Consumer Empowerment (FACE) & CEO of CASHe. Views expressed are the author’s own.
With the background of the financial crisis in 2007, the banking system installed stringent measures while availing credit to consumers and businesses.
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