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FinTech Leaders spoke on the need of a broader licensing framework for the fintech ecosystem, with more and more fintechs voluntarily wanting to be regulated. They further highlighted how every digital lender has a hero product today but are unsure about what next they can bring to the table.
The FinTech executives think that there is an underlying need for a larger licensing structure in the fintech ecosystem, and they emphasized how companies are willing to be regulated in order to expand their operations.
Today a lot of loan providers (LSPs) are wanting to become REs while REs are thinking of a step further, so fintechs are voluntarily wanting to be regulated and from the policy point, we will need to think of a broader licensing framework, said Sashank Rishyasringa, Co-Founder & MD, axio.
However, Sashank appreciated the proactiveness of the regulator contributing to the industry growth and said, “Even though the regulator is proactive and a lot of regulations are coming in, RBI has been a net positive for the industry.”
Resonating with Sashank, Fibe’s Co-founder and CFO, Ashish Goyal, emphasized how there have been several restrictions around collections and how his firm and the lending ecosystem have changed significantly in terms of underwriting models, digital lending apps, and so on.
Sashank commented on the issue of surviving in today’s competitive digital lending business, stating that genuine digital lending began when each fintech began to identify a certain niche in the lending sector and then built around it.
“So, every digital lender today has built their hero product but the real question now is, what’s next for the customer, what else can companies do now to grow further,” Sashank asserted. This could include expanding into new areas such as personal loan online offerings to meet diverse customer needs.
BNPL’s good & bad name
Speaking on Buy Now Pay Later, the digital lenders emphasized that BNPL has both a good and a poor reputation, and that despite certain mistakes, it has provided customers the chance to be alert. They stated that growth in this area would continue, but industry participants must exercise caution when it comes to overexposure, especially given the RBI’s concerns.
“BNPL has both a good name and a bad name in the industry. BNPL is a product which has gone through its own cycle, there will be some missteps but it has given an opportunity to the consumers to be aware,” Ashish stated.
Speaking on similar lines, Sanjay Aggarwal, Co-Founder & Director, Moneyview said that quick loans in BNPL has seen huge adoption and it has brought a change in consumer behaviour also.
Consumption of these loan have been easier, the growth will continue in this space also but there is a need for the industry to also be cautious here as it could lead to overexposure in the market,” he asserted.
Lenders draw comfort from Data
The fintech executives emphasised how much data is being generated and how digital lenders are benefiting from it, including access to clients and repayment.
“The digital financing started becoming more accessible to businesses. What has changed over the years, with GST coming in and businesses being forced to move to GST, is a lot of data footprint has started getting edged and this data is helping lenders analyse the customers and their loan repayments,” said Anurag Jain, Founder & ED, KredX.
Karan Mehta, Founder & CTO, Ring further highlighted that we have to look at repayment absolutely from the data science perspective.
“The digital footprint is incredibly rich in India and that’s where lenders draw comfort from,” he stated. This data-driven approach has led to the development of sophisticated instant loan app solutions that can quickly assess creditworthiness.
Highlighting on retrieving data through social footprint, Rohit Taneja, Founder & CEO, Decentro said that very limited data is derived from a customer’s social footprint.
He said that if the industry can use the social footprint of a customer and understand that whether that customer will default or not, then that’s where the real technology will come to play and that is where the real innovation will happen.
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