When people decide to take a loan, unlike the only traditional option of going to a bank, they also have a slew of fintech companies providing various credit instruments. These fintech companies often appear on the search options; this shows how companies are utilizing user's data with the help of technology to assist new consumers get what they need. It also benefits the industry to improve the consumer experience, increase outreach, and reduce operational fiction. After COVID-19, fintech has become a buzzword in the finance sector and reshaped the banking, insurance, and investment sector. It also can improve the daily life of the people and spur growth. The simple meaning of digital lending is to allow consumers to complete the whole process of loan application, digitally without visiting physical facilities.
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In the current scenario, the digital transactions are taking place at a higher pace than ever. That is why companies are communicating with the consumers more frequently and making the procedure easier to understand. Transparency in communication has made the sector more trustworthy and enhances consumer engagement. Thus, communication and convenience has made fintech the first choice for millennials and young professionals.
The concept of payment has also completely changed; the demand for digital wallets has increased because people prefer cashless payment in comparison to cash payments or paying via debit or credit cards. It will boost the digital transactions and help companies to gather useful data, which can help them in creating better products for consumers and building cost-effective set-ups for businesses to grow.
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Technology is the base of this industry. The whole industry depends on data analytics, machine learning, and artificial intelligence. Artificial intelligence has already helped in reducing costs and monitoring risk on transactions. According to a financial research firm, "AI is projected to reduce operating costs by 22 per cent around 2030." Block chain and big data are two technologies that are being widely adopted by the brands. According to the experts, brands find block chain technology helpful in ensuring secure payments, reducing fraudulent activities and phishing attacks.
It is a customer-centric industry, which observes the behavioral pattern of consumers and then provides products accordingly. Through AI, fintech companies can refer to their observations of customer behavior, their purchasing pattern and more such indicators, which can be used to extend services, without relying on traditional indicators like Credit Score. Its growth is assured as it continues to take more strides towards technology advancement and upgraded strategies to reach a larger audience.
The author is Founding Member of Fintech Association for Consumer Empowerment, CEO and Co-Founder, Loan Tap
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