Incorporation of Innovation in the Non-Banking Financial Companies (NBFCs)
NBFCs are a significant contributor to the growth of the Banking, Financial Services, and Insurance (BFSI) sector in India. BFSI cannot stand alone without NBFCS support. As the customer base of any business determines its success or failure, it’s indispensable to win the trust of the end-users. Non-Banking Financial Companies values costumers’ needs and focuses on developing innovative products. NBFCs adopt different business models to attract potential leads and boost its customer base by offering tailor-made services. Furthermore, to incorporate innovation in NBFCs, such companies invest in new technologies.
Why is it essential for NBFCs to innovate new products?
NBFCs have already proven their mettle in empowering several businesses through credit and loans. It’s time for them to deploy the advanced digital channels and enlarge their reach in the market by developing applications. By investing in new technologies, the NBFCs will lower the cost to increase their customer base while retaining their existing customers or de-risking investment portfolio to overcome the inflation of formal credit penetration in a growing economy.
Key Benefits of Technology in NBFCs
Technology can do wonders in revamping the functions of a Non-Banking Financial Company. Let’s have a look at the advantages that NBFCs can avail from technology:
Acquisition and leverage of Customer’s data
One of the primary reasons behind the rise of NBFCs is its reduced risk appetite in the public sector banks to lend money since they keep an eye on their mounting debts and NPAs. Often, NBFCs aims to target the rejected applicants of commercial banks and inhabitants of rural areas. It creates a massive opportunity for Non-Banking financial companies to expand and suffice the needs of their target audience. Technology is the perfect solution to analyse, capture and manage data of their customers accurately. It will help NBFCs to have a better understanding of their customers and make lending decisions accordingly.
Building customized products
It is of utmost importance for NBFCs to stay updated with the latest tech innovations for making strategies to reach their target audience. They need to outreach the boundaries of standard loans offered to low-income farmers or small business owners. NBFCs should innovate tailored products for its customers by using technology. Technology will enable NBFCs to send out an automated message and give a user-friendly experience to customers.
Lower costs through digitization
Technology has the potential to ease the business operations of NBFCs by reducing the cost of administration. By availing high-tech, the companies can optimize their available assets and workforce to render quality services consequently.
Incorporation of Innovation in NBFCs
Cloud Computing : –
It refers to on-demand accessibility of computer system resources such as data storage and computing power, without active management by the user’s side. Cloud computing brings efficiency and flexibility in the business model. One can leverage an array of benefits from cloud services like quick implementation, lower costs, and universal availability. Cloud Computing is a web-based end-to-end Loan Origination Software (LOS) platform that NBFCs can quickly deploy, unlike other legacy systems.
Cognitive Computing and Artificial intelligence (AI)
A human cannot challenge a machine in terms of intellect. Henceforth, AI or AI runs on the principle that machines can make a smarter decision than humans. Cognitive Computing is a broad term that engulfs techniques such as predictive analytics, speech recognition and machine learning. Presently, many NBFCs have acknowledged the power of AI and cognitive computing, and they are embracing it in their day-to-day operations.
Another tech-innovation that NBFCs harness actively is Automation. It helps to double the speeds of lending processes and facilitates an accurate display of loan applications. A series of predetermined decision rules precisely defines Automation.
Several reputed banks and NBFCs saves millions in cost transactions via Blockchain. It connects various unknown parties of diverse geographical locations to access an updated digital ledger. Nowadays, a lot of Indian NBFC believes in the prowess of Blockchain. Some leading NBFCs of India apply blockchain technology for services like settling claims and travel insurance.
Read, Also: The Latest Trends in NBFC Business Model.