Finance and technology: Loan in a minute

Financial institutions, financial procedures, and financial services have drastically evolved and improved in the last few decades. With the evolution of technology, the entire industry has undergone a massive transformation that has changed the way the financial procedures are carried out and the way the financial institutions operate.

The collaboration between finance and technology has led to a radical change in several aspects of finances like banking, investment, trading, cryptocurrency and more. Banking software and mobile NBFCs applications are examples of the growth of our sector.

Major developments over the last decade, like the development of India Stack, has completely taken the game to the next level. In the current scenario, Application programming Interface (API) has enabled us to fetch and validate real-time client information from multiple sources.

Using alternate data, behavioural scores enable lending into a new credit segment. Artificial intelligence and machine learning are used to continuously train and upgrade credit algorithms. These technical innovations have enabled us to expand the financing option to customers where lending would not have been possible earlier.

In a start-up, the best of analytics is yet to come in financial services. The lending industry is still largely paper-based and most of the analytics currently are inward focused rather than customer-focused. There are many Fintech NBFCs start-ups in India alone, getting any product discovered amongst the competition is definitely a challenge. Some glaring challenges & advantages are:

Cybersecurity

Fending off cyber-attacks in one of the greatest challenges faced by businesses and governments around the world, and given the sensitive nature of the client data they hold, they’re a serious concern for Fintech firms.

Recovery of loans

Financial institutions, financial procedures, and financial services have drastically evolved and improved in the last few decades. With the evolution of technology, the entire industry has undergone a massive transformation that has changed the way the financial procedures are carried out and the way the financial institutions operate.

The collaboration between finance and technology has led to a radical change in several aspects of finances like banking, investment, trading, cryptocurrency and more.

We have built a digital backbone to hardwire analytics into all the business decisions resulting in an end to end digital solution across customer life cycle viz., lead management, acquisition, underwriting, cross-sell and collections.

Over the last 10 years, we have seen the start-up ecosystem transforming in India. Setting up a company has become super easy; there are ready coworking offices available, which provide best in class infra facilities. There are start-ups whom you can outsource all your non-core functions like finance and infrastructure maintenance.

Even the HR function can be outsourced. Funding environment has matured now, with all VCs having seen one full cycle of entry and exit. In a nutshell, there was never a better time to start your own venture in India.

On the flip side, one big change which is yet to happen is entrepreneurs getting better preferential rights in their company as compared to the investors. Financiers and the entire ecosystem has to be more forgiving and accepting of failures. It’s a proven fact that only 1% start-ups succeed. For the rest 99%, entrepreneurs put in an equal amount of hard work and deserve to be equally respected by everyone around.

This change will take some more time to come about in our society. When that happens, entrepreneurs will innovate more and take bigger risks without carrying a burden on their conscience.

Market Potential

Loan seekers are largely the youth who seek funds for travel, health, retail purchases or marriage. Not to overlook they must have a good banking track record.

(The writer is Co-Founder, Finnable Credit Private Limited, Bengaluru)