NBFCs And The Digital Payments Landscape
India’s financial landscape is being revolutionized by the convergence of non-banking financial companies (NBFCs) and digital payments. India’s digital lending market has experienced remarkable growth, reaching USD 270 billion in 2022 and expected to reach USD 350 billion by 2023, according to a recent report by Experian. In light of such a vast scope, let’s examine how digital payments can be beneficial to NBFCs in a few real-life scenarios abhay bhutada md.
Enhancing the customer experience
The integration of digital payments allows NBFCs to provide an enhanced customer experience. With mobile wallets, UPI, and online banking, it is easy to make loan repayments and conduct financial transactions. With 24/7 digital access, speed and convenience are multiplied Abhay Bhutada!
NBFCs can engage and interact with their customers in real time using certain digital payment platforms that offer features such as transaction tracking, automated reminders, and personalized notifications. In a competitive market, digital payments can enhance customer satisfaction, foster loyalty, and differentiate NBFCs.
Disbursements of loans are streamlined and faster
Digital-first approaches can help NBFCs streamline their loan disbursement processes. Traditional methods require a lot of paperwork and lengthy verification processes, which can be time-consuming.
With digital payments, NBFCs can disburse loans directly into borrowers’ digital wallets or bank accounts. This eliminates the need for manual intervention, reduces processing time, and ensures that borrowers can access funds quickly. By streamlining the loan disbursement process, NBFCs can improve their operational efficiency and improve their borrower experience.
A better assessment of risk
With advanced analytics and machine learning algorithms, NBFCs can analyze transaction history, spending patterns, and repayment behavior of borrowers in order to significantly improve their risk assessment processes. This approach enables more accurate risk assessment and credit decision-making.
In this way, NBFCs can identify creditworthy borrowers, detect fraud, and better predict the likelihood of default. NBFCs can reduce risks and enhance their underwriting capabilities by incorporating digital payment data into their risk assessment models.
Inclusion in the financial system
In traditional lending systems, individuals without a credit history may have trouble getting a loan, so NBFCs might tap into the popularity of UPIs to promote financial inclusion. Digital payment platforms, however, allow NBFCs to use alternative data sources, such as transaction history, digital footprints, etc., to determine creditworthiness.
As Chairman of Bajaj Finserv, Sanjiv Bajaj explains, technology is helping to foster financial inclusion in rural areas among the younger population. Fintech can contribute to strengthening the nation’s economy through fast adoption of technology.
Collaboration or Fintech development
It is possible for NBFCs to integrate digital payment solutions effectively by forging strategic partnerships with fintech startups that specialize in digital payments or even by developing their own. By doing so, NBFCs can benefit from the fintech ecosystem’s advanced analytics, robust payment infrastructure, and customer-centric digital platforms.
According to Abhay Bhutada, the company’s CEO, Poonawalla Fincorp has developed multiple software solutions for customer relationship management and loan origination. Through an end-to-end digital process, Poonawalla Fincorp ensures customer satisfaction through WhatsApp-based lending and other services.
In conclusion
In the past, NBFCs had limited payment options like net banking and debit cards. But now, they can offer a wider range of convenient payment modes including UPI and the like. This allows for quick and hassle-free access to loan services and meeting customer expectations. In other words, streamlined and paperless operations could be the future of digital lending.
