Reasons Why the Blue Collared Workforce is Crucial For Fintech Firms' Growth
This working class is often ignored by traditional financial institutions but their loss is fintech startups' gain
There is no dearth of man-force in the country. However, a majority of them are semi-skilled and majorly known as the blue-collar workforce. They comprise of divers, security guards, logistics, beauticians, construction, manufacturing, domestic workers, maintenance, etc and play an important role in overall economic growth.
In fact, according to a BetterPlace report predicts that over 14 lakh jobs of the total 21 lakh blue-collar jobs in the year 2019-20 will be in the gig economy.
The average salary of this working class is between INR 15,000 to 30,000, which clearly states that they do have income for disposal. However, very few of them have access to formal banking services.
Financial institutions' loss is fintech startups' gain. Aditya Kumar, Founder & CEO Qbera.com believes the opportunity to serve this class is stupendous as the blue-collar workforce in the country is undoubtedly massive. It also poses a clear opportunity for fintech lenders to cater to a segment of individuals who remain largely underserved, mostly owing to their class profession.
"They certainly cannot be ignored. Increased credit penetration can be beneficial in several ways such as raising the general standard of living, improving access to goods and services, and positively influencing the quality of lifestyle enjoyed by individuals," he added.
How Big is Big?
In fact, some of the fintech startups dub this opportunity as a next billion dollar opportunity. Rahul Sekar, CTO and Co-Founder, Shubh Loans claims that India's economy is growing very fast, within that the middle income and lower-middle income groups are expected to grow much faster than other segments and with growth comes opportunity.
"The impact we could create in changing their lives is tremendous. Instead of solving convenience for the higher income segment, the fintech startups could focus on solving more fundamental problems for the blue collared segment," he shared.
While it is not easy to give a set number, Bala Parthasarathy, CEO and Co-founder, MoneyTap says there would be around 50million users who are hungry for financial services within this segment.
"The blue-collar workforce also comprises of smartphones users and they have learned how to use apps like PayTM, Flipkart and Ola. Traditional banks have offered zero financial services to them besides grudgingly opening bank accounts. They're ripe for targeting," Parthasarathy pointed out.
One of the key issues catering this segment is the lack of financial literacy. People in this segment are rejected by traditional financial services companies and hence, the end up using informal mode for their financial needs. This class needs to be educated about the new-age investment options, access to credit, saving solutions, etc.
Kumar from Qbera.com notes that fintech startups are offering loans to a large segment of underserved professionals but there is lack of awareness among the masses.
"When people are aware that they can improve their approval chances by applying with fintech firm and getting a loan can actually be extremely easy, the credit equation in the economy is certain to change for the better," he said.
Moving to the digital world, Sekar says blue-collar worker also need to be aware of privacy and security with respect to accessing financial products online. "A lot of the financial activities in this segment could be politicized. Unions are prevalent, this could throw off serious businesses from reaching out to this segment, he explained."
Nevertheless, the growth of this class, the future might be bright for fintech companies and may be, it is a matter of time that we would see a unicorn emerges in this segment.