Fintechs are hot properties as people prefer buying goods and financial or other services online. Vijay Mani, Partner, Deloitte India, explains the role and road ahead for fintechs, during an interview with Anagh Pal.
Q: Digital payment was already picking up. Will COVID-19 accelerate the trend?
Overall spends are down. That impact can be seen significantly in lower card spend volumes. However, non-card expenses, like UPI, have shown remarkable resilience. After dipping below the one billion volume mark in Apr ’20 (albeit marginally), monthly transaction volume is growing again and is close to 1.5 billion. As such, COVID-19 has provided some impetus to an already strong trend towards non-card online/ app-based payments. The lockdown has forced both consumers and merchants to adopt/ increase usage of app-based payments. Demonetisation too had a similar effect. This time, however, the change is being sustained over a longer period of time. Over a billion mobile payments per day is not too far in the future.
Q: What could we expect in digital lending, in terms of new services and features?
Unsecured digital lending cycle will need to be better tailored for different types of borrowers. The higher risk of delinquency will bring this change. Also digitisation will extend to secure loan products. Lenders will make their processes smarter, with more automation, better insight of portfolio and action for risk management.
Q: Should we see more fintech companies meeting the demand for digital payment and lending?
Globally, the number of fintech deals have been falling year on year, but funding has not fallen. Investors prefer mature fintechs. It remains to be seen when the need for a fresh innovation will bring growth in early stage deals. The longer term prospects are great as more consumers buy goods and financial or other services online. In the near term though, fintechs face the challenge of managing through significant uncertainty – managing costs, maintaining business/ operational resilience.
Q: How will existing banks adapt to it with relevant solutions for customers?
Banks will need to expand on partnerships, not just with fintechs but with non-financial service providers as well. This will help banks to better embed themselves with their customers’ journeys as building in-house solutions will take more time.
Q: Are customers more vulnerable to cybersecurity frauds? How would banks and NBFCs tackle it?
Yes. As more new customers take to digital financial services, there is a higher risk of falling prey to cyber frauds. Banks and NBFCs will need sophisticated anomaly detection/ other tools for prevention. They will also need to work more on customer awareness.