FinTech partnerships will enable a crucial headstart in driving innovation & creating value for a new generation of customers while embracing industry trends such as generative AI, embedded finance, open banking, data-driven insights and the expansion of customer outreach
Prashant Muddu,
CEO & MD,
Jocata
Mumbai, December 4, 2023: As we reflect on the final chapters of 2023, it is evident that this year has been both challenging and rewarding for the Indian banking industry. With the winds of digitization sweeping across the nation and the Digital India Stack making significant strides, the financial landscape has evolved providing greater access to finance. By 2030, the Indian digital consumer lending market is projected to exceed $720 Bn by 2030, accounting for almost 55% of the total $1.3 Tn+ digital lending market opportunity in the country.
The year 2024 looks promising, with a rapid pace of change and a wealth of opportunities. As Indian financial ecosystem continues to mature, strong partnerships between traditional institutions & FinTechs become increasingly important to deliver meaningful experiences. FinTech partnerships will enable a crucial headstart in driving innovation & creating value for a new generation of customers while embracing industry trends such as generative AI, embedded finance, open banking, data-driven insights and the expansion of customer outreach beyond conventional banking channels. Together, they can create a sustainable future that strikes the right balance between inclusion, innovation, and regulation.
The primary objective remains the enhancement of financial inclusion, particularly for MSMEs and new-to-credit/thin-file customers. It is essential for financial institutions to leverage AI/ML powered scoring models to assess Retail & MSME borrowers, providing deep holistic understanding of their behaviour and giving them a competitive edge. Layering advance technologies such as AI/ML on GST data will provide a deep understanding of an MSME’s performance across business cycles thereby highlighting any potential risk associated with the business and reducing the Total Time-to-Credit from 2-5 days to less than 6 hours. Similarly, for Retail customers using alternative data like bank statements brings a fresh perspective. Analysing bank transactions of individuals such as income, recurring inflows & outflows, financial asset expenditure, investment income etc provides lenders a complete picture of individual’s financial situation with income, fraud and risk insights.
The entity-level financial inclusion approach can be extended to the macro-level view of MSMEs by leveraging the recently launched India’s first MSME Economic Activity Index. It uses consent-led and anonymized monthly GST sales data and accurately represents the MSME economy and capture the impact of macroeconomic conditions. It will address the MSME knowledge gap and empower financial institutions, policymakers, economists and researchers to strategize credit flow and create tailored policies for the sustainable growth of MSMEs across the country.
Looking ahead, we are confident that 2024 will be an exciting year for the industry and India as it strives to achieve its growth ambitions, setting new benchmarks for sustainable and inclusive economics development for the world”.
(Technology platform, Jocata GRIDTM, is a fast, adaptive digital ecosystem that handles millions of transactions per day, delivering solutions that drive business growth, streamline operations, provide risk-adjusted insights, and ensure regulatory compliance.)
