Prior to the pandemic, the lending industry was growing rapidly. However, in just a few months, we experienced a rate of disruption that changed everything that was common in financial services. Apart from rising consumer expectations and rising competition from non-traditional financial institutions, many banks emerged stronger than ever since the 2008 financial crisis, backed by technology. The pandemic has also changed the way financial institutions approach their customer engagement. Since the loan trip is a combination of physical and digital processes, there is a rapid movement towards a complete digital journey.
In India, proactive interventions to increase the demand for credit include heavy infusion of capital, liquidity breathers and loan moratorium. As observed during the pandemic, despite the above interventions, lenders and other financial institutions use modern digital technology to reach out to the customers.
The following describes how the credit sector will explode in the near future when lenders provide better skills with the advent of digitization.
Government interventions create a platform for digital realization of the need for a credit line
Gone are the days when you had to face the queue, and travel from bank to bank to apply for a loan. Banks and NBFC’s embrace digitization alongside FinTechs that are not only limited to qualifications of applicants but cover fulfilment too.
The Government of India has made significant interventions such as the payment ecosystem and the Consent Architecture for data sharing, which enable digital-led lending processes.
The Reserve Bank of India (RBI) has also played a key role with the launch of video KYC Process. Video-based (KYC) processes provide an alternative, reliable and economically viable way to validate customers and facilitate their onboarding. Many banks and financial institutions can use this approach to make the customer onboarding process completely touch-free.
With online financial platforms like Finserv MARKETS, processing loan applications end-to-end has become quite seamless. This digital platform has two components: Workflow (which provides processes and helps in information capturing) and Business Rules Engine (to make the credit decision work).
Business Rules Engine can process a variety of information, data scores, creditors’ credit policies, analytical models among others. With this control in hand, we at Finserv MARKETS are able to increase market competitiveness and build in-house Machine Learning based customer evaluation methods by periodically reviewing data stored on the platform.
Lending institutions will have to give priority to realizing the lifetime value of their existing clients. Identifying this value can be a key driver in building better interactions that increases customer loyalty and thus their value for relationships.
Understanding customer lifetime profitability using behavioral analytics using Credit Bureau data is a strong driver. Lenders have the opportunity to periodically review their customers by overlaying the bureau data and improve their reach by building strong propensity models.
The advantage of adopting this practice is that there is no need to promote the brand to the existing customer.
As we are heading towards a digital economy, it is a good time for the lenders to re-examine how technology, data, and digital evaluation of customers can boost their future growth and competitiveness. The after effects of the pandemic might reinstate the digital adoption even more than what demonetization had forced it to.
“Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.”