The convergence of non-banking financial companies (NBFCs) and digital payments is revolutionizing India’s financial landscape. According to a recent report by Experian, India’s digital lending market experienced remarkable growth, reaching USD 270 billion in 2022 and is projected to reach USD 350 billion by the end of 2023. With such a huge scope, let’s look at how digital payments can help NBFCs along with some real-life examples.
1. Enhanced Customer Experience
The integration of digital payments enables NBFCs to provide an enhanced customer experience. With the convenience of mobile wallets, UPI, and online banking, you can easily make loan repayments and conduct financial transactions. As you have 24/7 digital access, the service speed and convenience simply multiply!
Certain digital payment platforms also offer features such as transaction tracking, automated reminders, and personalized notifications, allowing NBFCs to engage and interact with customers in real time. With digital payments, NBFCs can elevate customer satisfaction, foster loyalty, and differentiate themselves in a competitive market.
2. Streamlined And Faster Loan Disbursements
Adopting a digital-first approach can help NBFCs streamline their loan disbursement process. Traditional methods involve a lot of physical paperwork and lengthy verification processes, taking up a lot of time and effort.
With digital payments, NBFCs can disburse loans directly into borrowers’ digital wallets or bank accounts. This removes the need for manual intervention, reduces processing time, and ensures that borrowers can access the funds quickly. The streamlined loan disbursement process improves operational efficiency for NBFCs and enhances the overall borrower experience.
3. Improved Risk Assessment
Digital payments provide valuable data that can significantly improve NBFCs’ risk assessment processes. Using advanced analytics and machine learning algorithms, NBFCs can analyze transaction history, spending patterns, and repayment behavior of borrowers. This approach enables more accurate risk assessment and credit decision-making.
With this, NBFCs can identify creditworthy borrowers, detect fraudulent activities, and better predict the likelihood of someone defaulting on their payments. By incorporating digital payment data into their risk assessment models, NBFCs can enhance their underwriting capabilities, and minimize risks.
4. Financial Inclusion
NBFCs may tap into the popularity of UPIs, which can promote financial inclusion by reaching underserved areas. In traditional lending systems, individuals without a credit history may find it difficult to get a loan. However, digital payment platforms allow NBFCs to tap into alternative data sources such as transaction history, digital footprints, etc. to evaluate creditworthiness.
Sanjiv Bajaj, Chairman of Bajaj Finserv, says that the way technology is promoting financial services in rural regions among the younger population is fostering financial inclusion. Fast adoption of technology is pivotal to it, and fintech can contribute to strengthening the nation’s economy.
5. Collaboration Or Developing Fintech
To effectively incorporate digital payment solutions, NBFCs can forge strategic collaborations with fintech startups specializing in digital payments or may even develop in-house solutions. With this, NBFCs can leverage the fintech ecosystem’s capabilities, including robust payment infrastructure, advanced analytics, and customer-centric digital platforms.
Abhay Bhutada, Poonawalla Fincorp’s MD, has said that the company has developed multiple software solutions for customer relationship management and loan origination systems. By offering WhatsApp-based lending and other services, Poonawalla Fincorp is able to ensure customer satisfaction through an end-to-end digital process.
Conclusion
In the past, NBFCs had limited payment options like net banking and debit cards. But now, they can offer customers a wider range of convenient payment modes including UPI and the above. This allows for quick and hassle-free access to loan services and meeting customer expectations. So, streamlined and paperless operations may be the future of the digital lending world.
