How Fintech Companies Are Changing the Idea Of Credit In India

The current fintech industry is normalizing credit in smaller and daily life purchases

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By Akshay Mehrotra

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Credit is a more frequent term in the current Indian fintech industry in comparison with a decade-ago period. India has developed as Asia's biggest target for fintech deals, leaving behind China. With around 33 deals valued at $647.5 million and has the highest investment in the fintech segment analyzed to China's that is $284.9 million during the quarter ended June 30, 2020, according to a research report released by RBSA Advisors.

Today credit is not limited to bigger or higher purchases such as a house, car, etc. The current fintech industry is normalizing credit in smaller and daily life purchases. The fintech companies are under a massive transformation concerning credit trends.

A group of Indians, especially the elderly, have a mindset that borrowing is not growing, resist purchases on EMI, and believes in the purchase through savings. But the same crowd involves credit in other services like newspaper vendors, domestic services, etc. Whereas tech-savvy youth is more into BNPL (Buy Now Pay Later) and credit purchase, as the consumer industry is a frequent trend changing, and a consumer may not get the same offer tomorrow.

And to make it more convenient, the fintech industry has come up with various reforms.

Lending as a service: The fintech company is easing the lending procedure, compliance, digital security, and cost-effectiveness by cloud technology. As a service technology improves user experience with digital provision and allows universal access to fintech solutions for a boarder customer segment.

Artificial intelligence: Artificial intelligence systems are programmed to record and store data that will help predict the lending risk and other insights for the user.

Digital payments: The digital lending process is currently acceptable by a digital lending application. The applications and software allow the user to register through a handy device like a smartphone and laptop. Submit required documents and be applicable for credit within hours of registration.

Biometrics: Financial transactions demand trust. Banking is getting digitalized to limit identity theft and the long and inconvenient banking process and make it all within a fraction of seconds. The biometric industry is helping the banking as well as fintech industry as it makes the services faster, more effective, and more secured. It ensures the level of authentication security available when it comes to protecting consumer data and blocking it from being endangered or lost and reduces server errors.

Educating users: When it comes to financing having, complete information is the priority. Especially, in a country like India where most of the population is illiterate and semi-educated. The fintech industry is using many services to educate and spread awareness about the various financing options possible.

Innovation: Innovation labs encourage financial inclusion ideas, inspire students and business people that require early-stage coaching. The innovation labs also collaborate with educational institutes and corporates. The innovation labs work intending to push the fintech industry and provide learning of their innovations.

Decreased eligible norms: A larger part of India's population is restricted from the credit or lending facility as the banking and financial institutes depend on the higher credit score of the consumer. Many fintech companies provide enabling credit access to all, including the underprivileged and un-served section of society.

Is fintech industry and banks collaborative in nature?

Well, the fintech industry and banks are more collaborative than competitive. The banks are following suit with fintech companies for enabling more fluid operations for consumer and business lending while UPI has brought top banking features, seamless fund routing, and merchant payments for consumers at their fingertips. Also, the fintech industry is looking forward to collaborating in sectors such as insurance, wealth management, and remittance with the participation of banks.

The upgrading technology has fostered collaboration between multiple financial service providers to deliver products and services via an open architecture structure. Also, the adoption of technologies such as AI, blockchain, Robo-advisors with fintech is bringing the traditional banking ecosystem to the 21st century. The technological remodeling of the entire financial system gives banks a choice to transition into fintech or become obsolete. Hence, it is not wrong to say that both the fintech and banks' existence depends on each other.

Fintech is one of the few industries that continued to grow despite the outbreak of COVID-19. The fintech industry accelerated because of the pandemic situation, as people preferred digital transactions rather than physically visiting bank locations. During the outbreak, fintech solutions served as a compelling way for consumers for the financial crisis by providing financial availability to businesses and individual end clients in times of severe worldwide social restrictions. Also, India has made huge progress in terms of the financial industry with the increased number of bank users and bank accounts. Whereas the fintech industry in India is working to provide financial services and affordable financing to the unbanked consumer.

Akshay Mehrotra

CEO and Co-Founder, Fibe

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