How tech is influencing the fintech space and providing risk-free deals

Fintech companies have arguably caused one of the largest tech-led disruptions in recent times. Nowhere is this more apparent than in India, where the introduction of the Unified Payments Interface has been a game-changer for the adoption of digital payment methods.

Just a decade ago, it would’ve been hard to imagine that diverse sections of our society would be making digital payments through their mobile phones daily. Apart from increased accessibility and convenience, fintech solutions have also improved risk management and efficiency.

Technology has managed to eliminate several constraints in banking associated with lending to ‘new to credit’ (NTC) customers, broadening the market and driving financial inclusion. The fact that technology has enabled the onboarding of new customers by the millions, is a testament to the tech innovations propagated by fintech firms.

The introduction of these novel tech services has resulted in increased credit penetration, by making lending to semi-urban and rural customers commercially viable. The associated risks are mitigated through the initiation of ‘point in time’ (PIT) credit alternatives, allowing simplified and effective pre-lending assessments of potential customers.

Furthermore, an array of services such as short-term payday loans, P2P lending, instant B2B loans, Point of Sale (POS) based lending, etc. have been made available in a bid to bridge the gap between a wide range of income groups.

This increase in the base of ‘creditworthy’ people who had so far been left out of the traditional banking systems is expected to drive exponential growth in the penetration of credit, with a recent BCG report estimating that the disbursement of digital retail loans could multiply 5 times from the current levels in the next 5 years- a projected value of over $1 trillion.

The viability of these services is ensured through innovations in authentication technologies, which have widened the reach of several financial institutions including insurance companies, stockbrokers, mutual funds, lending and payment firms.

Apart from being expensive, traditional methods were time-consuming and prone to errors. Fintech has enabled easier assessment of customer information and identity authentication, streamlining KYC and other procedures with the click of a button while maintaining advanced checks and balances to ensure bonafide transactions and prevent identity theft.

Advancements in technology now allow for accessing, collating and analyzing discrete datasets to build comprehensive client profiles and drive intelligent decisions. Collating data from statutory filings, news, legal proceedings, credit ratings, etc. provides detailed insights into potential customers, thereby helping institutions assess them faster and more holistically.

Technologies like AI, Machine Learning, and Robotic Process Automation (RPA) have helped in predicting credit delinquencies and risks while reducing operational costs and turnaround time (TAT) across the value chain. Further, intelligent automation has improved decision making and data analytics, which is now instrumental in eliminating human error.

The next wave of change in the BSFI sector is likely to be heralded by the advent of the Account Aggregator ecosystem, which will give users far greater access to and control over their data and how it is used, through consent driven data dissemination to Financial Information Users.

Karza Technologies, leading BFSI-focused analytics, automation, and intelligence platform, has been at the forefront of this technological revolution, designing services to cater to stakeholders across the BFSI sector.

Karza’s TotalKYC tool enables banks and other institutions to seamlessly read and authenticate KYC documents in real-time, significantly mitigating the risk posed by fraudulent practices. K: Scan, Karza’s Business Intelligence platform – has increased access to credit for large and small businesses alike, by leveraging on hundreds of data points to pre-profile over 20 Million Indian businesses, ensuring effective diligence and quick turn around times.

Partnering with new-age financial service enablers like Karza enables traditional BFSI institutions to leverage the latest in advancements in fintech leading to faster, safer, and more profitable growth.