Here are a few ways through which new age fintech companies can bring financial inclusion:
The ongoing pandemic which started as a health hazard gradually changed the socio-economic paradigm of salaried Indians owing to salary cuts, increased interests on moratorium availed loans, increased living expenses etc breaking the financial and economic backbone of many households. These lockdown times were especially tough on growing economies like India, where financial inclusion has always been a distant goal.
At such juncture, new-age fintech companies with non-traditional credit solutions have become a ray of sunshine for credit-starved borrowers. At a time when most financial institutions are unable to extend a helping hand to a large section of society juggling with financial issues, the fintech industry evolved as a much-needed solution for a credit deprived salaried Indian borrowers.
In this context, here are a few ways through which new age fintech companies can bring financial inclusion:
The ability to reach a credit worthy yet credit started borrower is the speciality of digital first fintechs, however, the fintechs should move towards on-boarding borrowers who are semi-educated or uneducated too by offering apps in vernacular, assisted on-boarding with kiosks or even video on-boarding processes. This process will yield growth in reach and true financial inclusion.
Fintech should use all tools available to educate the borrowers of the options that they have available. Lack of education is the first and foremost reason that the borrowers reach out to family, friends or in most cases to a streetside loan shark for their credit needs. The awareness that they too can qualify for loans should effectively driven to this segment.
The India stack is the biggest boon for the fintech industry. While the traditional banks and financial institutions are heavily dependent on credit scores and employer categorization thus leaving out a large section of society from credit access. Add the New to Credit (NTC) section of society not employed with A-grade employers and the size grows multi-fold. This is where digital lenders can turn the tide as they typically go beyond the parameters of credit scores by leveraging their modernistic fintech solutions and enabling credit access to the under-served and unserved.
In a growing economy where digitization & digital footprint is growing rapidly, the trust in monetary transactions has to be earned. E-commerce used the COD facilities and fintechs should use “transparency & full-disclosure” to build trust in such borrower segments. Fintechs should do away with hidden fees and be upfront about all costs of the loan with such borrowers.
This group of borrowers are severely stressed and need their lender to work with them for repayments. While the intents are high, the situations may be glum and hence products that suit these borrowers should be developed where the borrowers have the flexibility to make payments based on their current situations and catch-up with the situations improve. Interest holidays or payment holidays are not what they seek but simply the flexibility to manage their credit should be offered.
Source: Business World