The FinTech Association for Consumer Empowerment (FACE) is a not-for-profit industry association committed to build a robust FinTech ecosystem in India. The association aims to drive ethical lending practices among the Indian FinTech sector.
The Indian economy has achieved significant milestones and evolved to newer heights since the Independence. After 73 years, the economy aims to reach $5trillion mark, and ably backed with key reforms, rising income, and literacy rate that truly reflect a billion aspirations , and the affinity to tap new opportunities of the modern Indian. Amongst the recent significant milestone initiative was demonetisation, an initiative by the government to accelerate the digital push and shift India towards a cashless economy. Led by the opportunity to drive financial inclusion and consumer convenience for digital transactions, this initiative provided a much-needed impetus to the rise of fintech service providers in credit lending, payment wallets and banks.
The evolution of mobile internet and easy smartphone access has also been a key enabler of financial inclusion in emerging markets and henceforth signalling a huge untapped opportunity for the credit lenders in the markets. As per techARC market research, India had about 502.2 million smartphone users as of December 2019, with which many individuals and businesses are now gaining easy access to a gamut of financial services at affordable costs. The rise of smartphones and financial services is leading to more Indians participating in the country’s financial sector and financial inclusion. This has been an important part for the companies to penetrate and cater to rural towns, low-income, semi-urban, and customers in unorganized sectors. It addresses the deeper levels of financial inclusion, which further enables stronger GDP growth rates and lower income inequality.
India is home to a large section of the population that still does not have access to financial services. With the key purpose to meet credit demands of the urban and rural population of India, financial inclusion aims to include the unbanked that largely depended on the cash-based transaction. Fintech entities have been one of the biggest disruptors in moulding the way financial services were delivered to the consumer through traditional banking services. Early adoption of innovative and disruptive technology by Fintech players enabled a revolutionary change in the financial services industry. With the background of the financial crisis in 2007, the banking system installed stringent measures while availing credit to consumers and businesses. Fintech players leveraged this opportunity to provide credit at lesser rates and with complete transparency to build a pool of loyal customer base.
With increasing access to financial services at the top of their fingers, customer expectations are on the rise. Consumers are attracted with greater transparency, flexibility and simple enrolment/application process to meet their growing credit demands. Today, personalised experience and rapid delivery take precedence over reputation and long-term-benefit to entice and retain the customer. Non-banking entities led by innovation and disruptive technology initiated the revolutionary change in the banking industry. There was an opportunity for them to be better, faster and cheaper than traditional banks by reaching customers through a digital-first approach.
The Fintech industry is embracing the opportunity to boost economic growth and financial inclusion, several start-ups are acting as a pivot to bridge the credit gap by offering flexible loans to people who are either unserved or deprived by traditional financial companies. The new-age financial framework also includes the innovation of small-ticket loans, minimal documentation, easy repayment options, digitally-enabled analysis of credit score etc. which introduced a new business opportunity to acquire such a group of customers and serve a new type of credit demand in the market.
The author is Founding Member of Finech Association for Consumer Empowerment, and Co-Founder & CEO of KreditBee