Non-banking financial companies (NBFCs) have played a pivotal role in meeting the financial needs of individuals and businesses that have traditionally remained un-served or underserved by banks. But the regulations for NBFCs have become stricter recently, the cost of borrowing has increased, and NBFCs are focusing on niche markets and personalized products and services.
The percentage of the total number of loans sanctioned by NBFCs through digital lending platforms increased by more than 55 percent between 2018 and 2020. There was a considerable rise in 2018 and 2019. Covid started spreading by the end of 2019, and the number spiked in 2020.
NBFCs are now more focused on developing innovative products and catering to low-income, urban customers in unorganized sectors. In such a scenario, NBFCs are adopting business and operational models powered by technologies that seamlessly facilitate the design, launch, implementation, and execution of tailored products and services. Investing in new technologies and strategic partnerships with incumbent financial institutions and FinTechs also allows NBFCs to lower their costs when it comes to increasing their customer base, reducing customer acquisition costs, servicing existing customers, or de-risking the portfolio while trying to overcome the increasing formal credit penetration in a growing economy.
New-age NBFCs are using technology more than ever and harnessing partnership ecosystems across the value chain of lead generation, customer onboarding, underwriting, credit/loan disbursement, and collection. Artificial intelligence (AI), machine learning (ML), and big data have equipped lenders to measure unique customer insights and build alternative credit scoring models. Mobile and smartphone penetration has enabled NBFCs to connect with low-income customers, who can use their mobile devices throughout the lending cycle of application, engagement, e-KYC, and e-signature for disbursements. Robotic process automation (RPA) has enabled streamlining of operational workflows, increasing productivity, accuracy, and cost savings. NBFCs are also experimenting and beta testing with distributed ledger technologies for various use cases such as e-KYC, data exchange, loan disbursement, and collection and cyber security. And application programming interfaces (APIs) are being built and tested for robust connected ecosystems of various institutions and stakeholders.
Finaxin Technology have agility and technology, which acts as a great equalizer. We explore below the strategic partnership and innovation models adopted by banking institutions, NBFCs, and FinTechs for going to market.
As a team of Finaxin technology, we do evidence-based research in the development field for mobile apps and also work on User interface and how much engaging the UI with the customer. Our mobile app developers and marketers analyze the current ongoing mobile app development status and its digital presence.
Mobile and smartphone penetration has enabled NBFCs to connect with low-income customers, who can use their mobile devices throughout the lending cycle of application, engagement, e-KYC, and e-signature for disbursements. Using their mobile applications in various operating systems gives them an extra edge in their operations and will be more dominating in the future.
