Here’s how innovation in the fintech space is accelerating financial inclusion in India | So Good News
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Creating financial inclusion is a priority for banks and other financial institutions today, especially for the semi-urban and rural segments. There are currently several headwinds and tailwinds that need to be addressed locally as a consequence of the tectonic shifts in the global economy. Despite this, there are several innovations in the fintech space.
In an enlightening story, Lingraju Savkar, President, India and Rajeev YadavMD & CEO, Fincare Small Finance Bank discusses SFB’s impact on the Indian economy, the role of technology in banking penetration and the reality of banking on the ground with the Founder & CEO of YourStory. Shraddha Sharma in the last part “New springboard” series. Presented by Kyndryl, the series brings together top leaders from high-potential startups, unicorns, and enterprise businesses to brainstorm ideas and discuss relevant aspects and perspectives that drive growth.
Acceptance of Indian Economy
There is no denying that geopolitical tensions at the global level have a real impact on financial services in India, believes Rajeev. But it also promises that India is a self-sustaining economy that can consistently weather inflationary pressures.
“I believe there has been a huge demand boost post-pandemic. In terms of consumer buoyancy, this is reflected in commercial vehicles or private vehicle sales. Although there are global winds, India is fairly insulated from the global crisis. The local context,” he adds, “is that their customer base is largely rural and the latter are directly affected. among.
Agreeing with Rajeev, Lingradu further notes that the consumption patterns of his clients are future proof. Citing the telecommunications industry as an example, he says that there is currently a huge demand for 5G.
“I see a strong demand in key areas. Some of the earlier initiatives of the government are also starting to take off and there is talent today. Things are looking positive,” he added.
The ground reality of financial services
At Fincare, their loan products help us gauge customer sentiment. Over the past six months, they have seen strong momentum in secured loans and stable portfolio performance.
“The industry is undergoing a recalibration after the regulator launched the new guidelines. Apart from this, consumer demand is strong and we have seen people wanting slightly bigger ticket loans than what they used to get. The industry will return to good growth momentum this financial year,” explains Rajeev.
Technology has been a key driver of increased penetration of the microfinance banking and microfinance segment, Lingreju believes. Traditional banks built huge core banking systems and everything revolved around internal data; but today small finance banks have no legacy. Instead, they’ve built systems that are thinner and lighter and can use innovation in a unique way to execute faster.
“Furthermore, government-recommended platforms like Aadhar and UPI provide better data availability, especially for monetization. It is also important to be properly structured, which helps in targeting the right customer segment and making quick changes,” he shares.
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The lending landscape
Although there is a distribution of talent across the financial sector, Raeev believes that large institutions operate more bureaucratically than smaller banks. Fintechs have a clear role to play in the future, especially in the consumer context. That said, regulatory bodies are needed to book loans.
“There’s a role for innovation in this space. It’s a space where you first give money and hope to get it back, a very strong innovation environment can lead to issues in credit quality or collection practices. But there’s a lot of potential here. For credit growth. So all the players in this ecosystem are high on consumers works to deliver the product,” Rajeev added.
Guaranteed loans have unlimited potential and currently Rajeev is focused on microfinance loans, affordable housing and property loans. Although the deposit franchise is spread all over the country, they are trying to deepen it even in the rural areas.
Future trends
There are three themes to consider from a banking perspective today, says Lingraju. The first is to attract customers, the next is to deal with the regulatory part, and the last is innovation, especially in traditional banking segments.
While small banks like Fincare are trying to create financial inclusion in the country, there is an interesting observation that their customers are mostly women. This helps them become financially savvy, take control of their investment decisions, and be confident about how they can repay their loans.
When you empower women at home, you not only uplift the family, but also the society as a whole, says Lingraju.
Rajeev is happy that they have a difficult problem to solve, keeping in mind the low-cost structures. This makes them agile, digital adopters and progressive in thinking.
The most exciting part today is that India’s breakthrough technology has been a solution to several complex problems, says Lingraju. The demographics of talent and how people perceive and adapt to change will propel India much further.
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