In India, the influence of millennials on its demography, rapid penetration of smart devices, and strategic mergers amongst fintech companies have accelerated the growth of fintech services. To provide financial services to people, fintech companies are leveraging innovative technologies. The pandemic has accelerated both the adoption and demand for digital lending.
With new business goals and cost-effective solutions, the following financial trends will surely change the financial sector in India.
Buy Now Pay Later (BNPL): India has about 100 million people who like to shop online and amongst them, only 25 million people own credit cards. This is because the Indian population consists of millennials and Gen Z who enjoy fast; seamless experiences and are card averse. So, the BNPL payment mode which is available at low cost or no cost EMI’s enables affordability especially in circumstances like big-ticket purchases. Job losses, salary cuts, and other factors have also contributed to the upswing of the BNPL mode of payment. To create a digital lending eco-system and to allow people with no credit history to avail credit, such platforms are being introduced.
Co-origination Of Loans: To address the credit gap, RBI has facilitated the co-origination of loans model which involves banks, fintechs, and NBFCs forming a partnership with each other to finance loans and undertake credit risks jointly. To finance the priority sector, financial institutions have engaged in the co‑origination of loans and several other institutes have adopted the same to finance small-ticket consumer loans. With the help of alternative data sources like social media profiles, purchase history, utility, and other bill payments – banks are utilizing this model to gauge a customer’s creditworthiness with no credit history.
Insuretech: Insuretech refers to designing policies with the use of technology that pull out maximum savings and efficiency from the existing insurance models. The youth prefer specialized products that support their changing lifestyles and interest. So, while insurance companies are using the online space to make application processes easy, the fintech companies are tailoring products for niche segments.
Personal Finance Management: Personal finance apps help manage budgets by providing insights into people’s incomes and expenditures. These apps also allow people to avail bundled products, wherein people can customize EMI tenures and access on-demand credit options.
With a watchful eye on consumer financial behavior, fintech companies are using technology to improve transparency, provide better customer services and make processes hassle-free.