Emerging NBFC & strategic partnerships helping FinTech Business to evolve
NBFCs in the Indian echo system have played an integral role in meeting the financial needs of businesses/individuals that have usually remained un-served by the banks segment. However, the regulations for NBFCs have become stringent in recent times. Recently NBFCs are focusing on niche markets and personalized products and services and developing innovative products to catering to urban customers, low-income and unorganized sectors.
NBFC Collaboration is a new business term in which NBFC License holders accept business and operational models backed by technologies that seamlessly facilitate the execution of tailored products and services. Capitalizing in new technologies and strategic partnerships with FinTech companies and financial institutions allows NBFCs to lower their costs & increasing their customer base by lowering customer acquisition costs, servicing existing customers. This way both parties may or not assume some amount of nonperforming assets risk and share revenue with each other.
New-age NBFCs are using the Fintech model more than ever to increase the lead generation process, streamline underwriting process, credit/loan disbursement mechanism, customer onboarding process and recovery model. Machine learning, Artificial intelligence, and big data have equipped lenders to measure individual customer insights and build alternate credit scoring models. Mobile App and the smartphone version of website penetration have enabled NBFCs to connect with low incomes customers.
Technologies build a new standard for FinTech companies
NBFC’s with FinTech approach is creating great value in the Indian financial space since its infinite potential to disrupt the traditional banking system. FinTech is now holding the grip in the areas of lending, deposits and credit system, asset management, fraud detection, alternative credit models, enterprise automation for accounting, treasury and reconciliation for traditional NBFCs.
Possibilities of collaboration:
- Technology company collaboration with Indian companies.
- Built In-house technology:
RBI has issued NBFC License to more than 9200+ companies in India. In few cases, NBFCs wish to innovate in-house, by building integrated solutions that have some challenges as below:
- The slow process of innovation, given the complexity of their businesses and a strict regulatory and compliance environment
- Challenging old structures and legacy systems
- Costly to develop technology & maintain
- Fintech company collaboration with Indian traditional NBFC’s
- NBFC’s can utilize technology platforms developed by FinTech companies
- Offer claims management/investment management services
- Referral arrangements system in the lending space,
- Better control of technology and resources
- Better control over loan disbursement
- API to identify the risk and avoided losses
- Collaboration with Investment Company
Working Flow of NBFC Collaboration with Investment company to raise the investment to build financial strength, especially in the case of Foreign Fintech investment company involvement.