Online NBFCs- Recent Trends and Players By CS Shweta Gupta | MUDS Management

Dear Professional Colleagues,

With a high growth rate every year, there are many ways in which internet has affected the financial services sector including the NBFCs in India. To differentiate their services and gain an 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.

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.

Saas companies operate on a business model that offer software solutions over the internet, charging their customers based on the usage of the software. With the country's financial solutions going onlineNBFCs are turning to software providers for the transition. Services such as credit score analysis; loan process automation and fraud detection through software are already on offer by different kinds of Saas companies such as online lending platforms, financial marketplace and data analytics startups. 

By catering to the needs of the emerging digital landscape, India’s leading NBFCs are taking timely and positive steps ‘to be online’, that is, to digitalise their lending processes – for both, business and retail lending.

As these NBFCs show disruptive digital trends or inclinations towards adapting the digital modes, the corporate sector is also playing a significant role, by helping these NBFCs in adapting tech-driven innovations. There are leading brands that have been helping the NBFCs transform their lending processes by providing new-age digital first lending systems, and converting them into what is called Online NBFCs.Backed by investors, and armed with robust technologies, a raft of online NBFC consumer lending portals has already mushroomed recently.

"Investors feel that the vacuum left by the traditional banks in terms of not meeting the financial needs of consumers satisfactorily has led to the proliferation of such startups."

- Isha Malik (Company Secretary, MUDS Management Pvt Ltd)

In other words, these Financial Technology NBFCs are replacing the traditional banking channels by making financial products and services more accessible and convenient for consumers who have been ignored by banks. 

Borrowers prefer the online NBFCs over banks as the former have faster decision-making capabilities, prompt services, and expertise in niche segments. They are more technologically advanced too. With the help of technology, customers are better able to transact just the way they want.

Digitalising the loan process not only helps the NBFC achieve faster processing time and improve productivity but also serve as ‘value addition’ to today’s tech-savvy generation who prefer digital mediums over the traditional ones.

Technology also allows NBFCs to tailor make products and customise services. They can send out well-targeted automated messages, provide more personal access to customers and provide more efficient service. Investing in new technologies also allow NBFCs to lower their cost whether it is increasing their customer base, servicing existing customers or de-risking the portfolio while trying to overcome the increasing formal credit penetration in a growing economy.

The Online NBFCs partner with merchant aggregators, and offer small digital loans to micro-entrepreneurs, starting from as low as Rs 2000 for as short as 30 days. These loans are 100 per cent digital and require zero physical documentation.

The Key Advantages of Online NBFC 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 customizations
The Online/ Fintech NBFC - NBFC with the Business model of FinTech- are agiler and significantly improve and ease the lending method. 
"If you are a new entrant to the Indian market and planning to innovate in the online fin-tech market, your business is going to be faster, more automated and optimized."

- Shweta Gupta, Founder and CEO, MUDS
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