Consumers have struggled with credit management for years. Many consumers have struggled to repay their credit card debt, and up until recently, an even larger percentage struggled to access credit at all. However, in recent years, the introduction of fintech has revolutionized the world of credit management for the economy. In India, the fintech market is predicted to be worth INR 6,207 billion by 2025, with more startups garnering interest from the ICICI Securities and a long list of investors. Tapped as the next big thing in fintech, business and consumer credit management is benefiting from the innovations in every respect, from their ability to secure home financing and the rates on their credit cards, to their employability. With new features and innovative credit management tools, fintech is changing the credit management landscape altogether.
Greater Access To Financial Services Means Greater Financial Inclusion
Financial inclusion remains a roadblock for many consumers. Today, almost 80 percent of consumers have bank accounts, signaling a marked improvement in access to financial facilities and tools, including mobile banking. While government-backed initiatives have helped to drive the delivery of digital financial services, fintech has been the main catalyst behind digital acceleration.
With a growing group of fintech companies introducing a wide range of technology ranging from payment platforms to cryptocurrency, consumers now have better access to financial facilities at competitive prices – something they are capitalizing on. In fact, India remains a top fintech destination in Asia, and has seen an 87 percent adoption rate, according to the EY Global FinTech Adoption Index.
New Savings Platforms Address The Low Income Savings Dilemma
Household savings in India declined as many consumers grappled with managing their personal finances amid tough times and income losses. Around 68 percent of consumers say that their household savings have declined in the last eight months. However, with fintech reshaping banking and the introduction of useful features like budgeting or money-saving tools on their phones, consumers of all backgrounds are better positioned to save and invest in their future.
Low-income consumers have always found it difficult to save, thanks to a limited amount of saving options offered by banking institutions. Now, companies worldwide are helping consumers save with a more cost-effective platform. Consumers can define a savings goal, such as saving for retirement, as AI is utilized to generate suitable financial plans using their personal financial markers – such as their credit score or risk profile. Consumers also stand a better chance of choosing high-return mediums for their nest egg, which not only helps them save, but also ensures that consumers get the best yield on their money.
Credit Control Platforms Reduce The Credit Risk For SMEs
The small business economy has remained steadfast in its growth for several years. In fact, Indian startups have thrived over the past year. However, small businesses and startups in the country have historically struggled to access business financing for their business ideas, and even when they did, the interest rates that were attached were heightened due to the perceived credit risk. A stunning 67 percent of finance credit for SMEs comes from informal credit sources like friends or family – from not banking institutions.
Now, fintech companies like Crediwatch are trying to change that by reducing the credit risk to both businesses and lenders. Crediwatch seeks to provide users with a “Trust Score” using AI scanned credit intelligence. Recently, the company secured $3.2 million in Series A funding, and managed to get lenders like SVI and RBL Bank to join their subscriber list. It is hoped that the commercialization of the software will change the formal credit landscape for both businesses and lenders in the coming years. Currently, less than 15 percent of SMEs in India can access formal credit.
This is just the tip of the iceberg. Mobile lending platforms like Cash+ now offer loans to Andriod users, while Neobank SaveIn targets younger or digital-savvy consumers with a 100 percent digital savings account and rewards. As more of the fintech services on offer continue to grow and more of the population adopts them, the term credit management will begin to take on a new meaning.