Since the past few years, Fintech industry (Finance+ Technology) has been surrounded in the financial services environment to such a point that the term has now entered into our daily lives. As the common perception of ‘Fintech’ is ‘products and companies that employ newly developed digital and online technologies in the banking and financial services industries’, we believe that Fintech industry has progressed to carry out a much more strategic and focused role.
The larger objective of Fintech is to serve the unmet financial requirements of those sections of the population that are not the core target sections of usual financial services models. Therefore, Fintech primarily focuses on a core objective to supply to the wider objective of financial inclusion for everyone.
Attempts in this course have marked by the following factors:
- The considerable rise of Fintech start-ups rolling out solutions and services
- Strategic affiliations between industry and related service providers
- The opening of new digital products or digital-only banks by incumbents
- Government involvement and support
With the creation of a sustainable ecosystem, the final aspire of the industry would be to ensure a major impact on the country’s gross domestic product (GDP). Despite the first wave guided in modernization across all phases of the customer lifecycle, the accomplishment was limited to the wealthy sections of society.
Bridging the Gap
Fintech 2.0 would acquire the cudgel and concentrate on the following 500 million of the population. This would cover sectors across urban and rustic territories narrowing on Tier I and Tier II Cities. It has made arrangements to contact the following 500 million of the populace. Some mediations are recommended to make a financially savvy and manageable environment to serve the unexplored sections.
Because of the lifestyle and eating habits of the people, there are so many diseases by which they get affected. Now, hospital charges are so costly that many of us cannot afford. Thus, families who cannot pay a large amount at a time, the patient suffers or may even not survive as the conditions worsen. Lack of funds for medical treatments cause death in many families. Such types of families are unroofed, as they fail to pay back the borrowed funds given by their friends and family. Most people opt for taking loans for buying a car, house, electronics or even a mobile phone, but sad to say, we do not think of securing our lives.
In India, according to many studies and researches, only 10 percent of people are medically insured. Different organizations in India are developing and willing to provide loans to the families of the patients, those are financially weak. They get loans from INR 20,000 to around 5 Lakhs for the time period of 6 months to 1 year period. Banks grant the loan from 0 to 6 percent interest rates as people can manage. A medical loan is paid directly to the concerned hospital after it generates a bill for a medical procedure to avoid any misuse. The requirements for creating an affordable healthcare financing model acts as the catalyst which has triggered the medical loans, which are unsecured. One can get the medical loans on submission of an impressive income proof and are now used for elective surgeries.
NBFCs and Fintech firms initiate medical loans within a day or two. As per the rules, the applicant has to deposit 2 EMIs in an up-front manner and the balance payment should be paid back in 10 installments while the hospital pays 7-9per cent of the loan amount as subvention fee. The scale is different from organization to organization. Specific NBFCs guarantee the due diligence protocols are followed by hospitals.
A salaried person who wants to get loan needs to be earning more than INR 20,000 and should be drawing a cheque or RTGS. Pan Card, ID proof, address proof, bank statements like salary slip etc are needed for applying it. A self-paid applicant, whose enterprise has to be Pvt. Ltd should provide details like ITR and bank statements with address proof, office address proof, business existence proof and house ownership proof while applying for a medical loan. The Credit Information Score or CIBIL score is the prime factor for determining the loan eligibility besides the review of standard income documents.
Fintech is not only about digitizing money, but also about monetizing data. It’s about how we generate value‑addition from data. It is the second‑round growth of value which is today starting to flow from an increasingly digitized economy. Fintech can give a competent and effective solution which will help small businesses and enhance funding options. The Fintech products comprise of marketplace lending, e-commerce finance invoice finance as well as online trade.
Assisting Small Businesses and the Market
Small business can get help from innovative solutions as they provide better cash flow, improved capital management and secure funding. Therefore, people can perform transactions through mobile phones which enhances the customer experience and reduce compliance costs for business.
The Fintech industry increases liquidity in the market as it increases the capability to match investors, lenders and borrowers. New financial services for example, robo advice is able to provide financial advice to the individuals and more experienced investors, to a larger section of the society. The Fintech is decreasing the equivalence in the market and as a result helps to reduce risk and endorse allocation of resources.
The computerized transactions support audit capability, transparency in payments and security in transactions by decreasing the risks. It has been seen that Fintech Industry has highly reduced the labour as everything is digitized.
The Developments it can do for the Economy
Fintech sector can help in the development which will occur in our national economy. The effective policy and microeconomic amend will be triggered by modernizations in India.
Ultimately, Fintech can also help bring improvements in traditional financial services and reduce disruption through innovative products and services, which can give benefits to consumers and different sectors of the economy.
Healthcare sector is evolving now. People, businesses and institutions are getting benefited because of innovation and disruption in the financial sector. Access to information, empowerment, performance, services and personalization will need innovative products and services from healthcare providers.