How Fintech Companies are Changing the Idea of Credit in India

Fintech companies are driving massive transformations in the credit landscape of India.

Fintech companies are changing the traditional credit trends that were prevalent in India and are driving enormous transformation in the country's credit ecosystem.

For the Indian mindset, the idea of credit is predominantly negative. Earlier, Indian families were reluctant to make purchases through EMIs. They would carefully save money and resources to make their purchases later.

It is tough to explain the conception of credit to the Indian mindset since the idea of 'not surviving in borrowings' is deeply ingrained. But paying the newspaper vendors, house helpers, milk deliverers at the end of every month involves paying in credit. We are all using the idea of credit every day, with our conscious sense.

A credit system allows its users to pay for goods on credit, which means that the payment is made later, usually on a fixed date, called the due date, at the end of every credit cycle.

The current financial revolution driven by the fintech industry is changing the credit landscape of the country. Over the years, financial services have witnessed massive growth and innovation. Introducing digital transformation in the finance industry has established a new credit ecosystem in the country. With the emergence of technology, various credit services like easy EMIs and different credit card payment options have eventually changed the perception of credit in India.

Fintech companies have introduced modern technology that has facilitated an easy and instant lending system that ensures consumers can access their credit details and other transaction particulars on their smartphones and other devices; without going through rigorous banking procedures.

With the increasing number of internet users in India, digital lending is making its way, changing the basis of credit and facilitating cost-effective credit opportunities to a large volume of the population. In addition to that, India's young generation is tech-savvy; therefore, credit is steadily becoming an acceptable concept. There are many ways in which technology is facilitating this change.

1. Cloud:

The basis of the transformation is the way fintech companies are leveraging advanced technologies and combining them with new business models. Fintech companies are profiting from the scalability, flexibility, advanced security, and cost-effectiveness offered by cloud technology. These advanced fintech technologies are omitting the lines of distinction between the old and the new lending opportunities. It has eased the lending and borrowing procedures, evaluates credit risks accurately, and improves customer experience.

2. Digital Payments:

Digitalization has enabled customers to apply for credits online through digital credit lending applications. These apps allow the users to register using their devices like smartphones and laptops to fill out an application, upload all the required documents, and getting it approved; just within a few hours. Since these processes use automation technology, online credit lending platforms operate at substantially lower costs than banks and other NBFCs.

3. AI/Ml Based Systems:

These systems are programmed to absorb data and predict consumer credit values and lending risks. Advanced artificial intelligence technologies can analyze large sets of unstructured data and draw meaningful insights from them. It creates great opportunities for fintech companies to provide the same benefits to the credit market, as achieved in the consumer markets.

Digital credit lending platforms are already overcoming the boundaries imposed by geographies. The idea of Digital India is driving fintech companies to break the language barriers and promote digital literacy. Fintech companies are creating a new credit ecosystem in India where everyone will get instant access to affordable credit opportunities with advanced security systems.