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How Technology is transitioning NBFC

Updated: May 3, 2023


Finance, that has rightly been termed as ‘driving force of business’ is short in supply for many people- startups, small firms and individuals as they are not able to satisfy tough conditions set by the banks. Moreover, most public sector banks and some private banks have been gripped with bad loans for the last few years and it has presented a tremendous opportunity for NBFCs to step in with its offerings and aim for growth and business success.


The companies after fulfilling NBFC incorporation procedure have witnessed a robust growth rate as they come to the rescue of such people and companies, especially in small towns and remote areas, and given them a lifeline NBFCs are now more focused on developing innovative products and catering to low-income, urban customers in unorganised 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.

RISE OF ONLINE NBFCs

With a high growth rate every year, there are many ways in which the internet has affected the financial services sector including the NBFCs in India. To differentiate their services and gain advantage over the rising competition, the Non-Banking Financial Companies (NBFC) are trying to provide their services online to the customers. This is one of the factors for which India’s NBFC sector is experiencing rapidly.


RISE OF ONLINE NBFCs


Investing in new technologies and strategic partnerships with incumbent financial institutions and FinTechs allows NBFCs to lower their costs when it comes to increasing their customer base, lowering customer acquisition costs, servicing existing customers or de-risking the portfolio while trying to overcome the increasing formal credit penetration in a growing economy.


NBFCs are undergoing a great technological innovation and revolution to disrupt how financial services have been made available to individuals, businesses and entrepreneurs. By taking the help of Software-as-a -service (SaaS) startups, NBFCs are adopting newer technology into their systems, especially in the light of the government’s push for digitisation


ADVANTAGES OF ONLINE NBFCs


The new-age NBFCs are using technology like never before and harnessing partnership eco-systems across the value chain of lead generation, customer onboarding, credit or loan disbursement and collection while facilitating the design, launch, implementation and execution of services.


The key advantages of online NBFCs are:

● Branchless operations to increase reach in market and reduction in operating cost ● Dealer based solution helps in expansion of business ● Automated End to End loan management ● Analytics to find cross selling and up selling opportunities ● Agility to quickly accommodate customer’s requirements and customization


Conclusion:

Technology boosted NBFC business models that aim to lower dependency on manual tasks and is built on the Robotic process automation, helps in broader inclusion, prowess in credit quality, cost-effectiveness and quick turnaround time as compared to the traditional lending models of banks.


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