New-age fintech firms have the potential to enhance and disrupt the digital lending space, aid financial inclusion, and help financial institutions upgrade their technology infrastructure significantly, fintech leaders said on Friday.
They were speaking at the FE Modern BFSI Summit.
Rajesh Bansal, CEO of RBI Innovation Hub (RBIH), said that a billion Indians are expected to avail digital finance in the next few years and for that to happen, fintechs will play a big part. “The public credit stack that we have built with the RBI will actually reinvent or lead to a UPI moment in lending in few years from now,” he said. The scope of usage of UPI itself, Bansal said, is yet to reach out maximum acheivable level.
Sabyasachi Goswami, CEO of Perfios, said that today, lenders want a “Swiggy-like” efficient customer experience on their digital properties, for which fintechs can play a big part. Fintechs can also help banks counter frauds and help them in compliance and audit process, he said.
Shashank Kumar, managing director at Razorpay, said that while a lot of innovation has happened on the payments and credit side, it caters only to the top 100 million-300 million consumers, and a vast array of Indians are yet to experience the ease of services.
“If you talk about top consumers, they will keep becoming more demanding. Efficient and more services will be needed,” he said, adding that if a fintech fails to provide best services to a customer, they will shift to a different company with a better user experience.
While a lot of chief financial officers before the pandemic were conservative on investing in digital stack, the mentality has changed now, and many of them are now ready to make investments on digital infrastructure to improve operational efficiency.
Anuradha Ramachandran, managing partner, TVS Capital Fund, said that the private equity fund is focusing on investing in the financial services delivery space.
“In our third fund, there are two companies which are technology bets and there are about six companies which are financials services companies which are tech enabled. For us, it is important that everyone needs to have tech at backend, else a few metrics don’t work out. These include turnaround time, among others” she said.
“We continue to look at financial services. From our new fund which is roughly about 4,000 crore in size, we will deploy about2,500 crore-`3,000 crore in financial services. And much of it will go to people who bring service to last mile customers and smaller merchants,” she added.
Perfios’s Goswami also said that the trend of past few years, where fintechs focused on valuation game rather than financials, are over. He said fintech companies must have a sustainable business model, which can lead to monetisation going ahead.
“You cannot startup a business without having sustainable business model. You cannot think of innovation if there is not light at end of tunnel. That means you need to break even at a certain point of time, there has to be time bound sustainability model where you start generating money to run the business itself,” he said.
“When we started, we did B2C and realised there is no money in B2C. Honestly, spend billions to get millions so no ways. We switched to B2B, not that B2B pays you enough but it is still better than B2C,” Goswami said.