FinTech Revolution That Will Drive Credit Awareness & Penetration In India
Technology helps people become more aware, and enables them to use that information to reduce clutter and confusion in order to make better financial choices
Finance is at the root of almost everything we do. We use it to buy the things we need, (a home, a car, a mobile phone), to help educate our children, and to pay for medical expenses, to name a few. Finance helps us take care of our loved ones, achieve our dreams and build a better life. But it can be complicated.
Too often, it’s the domain of highly educated professionals, who speak in a language almost unrecognisable to the average person. Whether it be the nuances of how much debt to take on, and at what cost, or which investments to make in order to achieve our financial goals, it seems like a complex world to navigate.
Ironically, the people who need it the least – the wealthy ones - often have access to the best advice. The masses are often left to search and decipher the huge banks of ambiguous information available in this digital age, with very little guidance.
Given that not everyone is trained in finance, sometimes people don’t make the best choices or find the product most suitable for their financial situation. For so long, it’s been impossible to provide personal attention and tailored information to everyone. That is, until now.
Recently, two material changes have paved the way for financial services firms to be able to serve millions of consumers in a personalised fashion:
1. Affordable internet-enabled smart phones
2. The proliferation of data usage
The number of internet users on mobile phones has grown to hundreds of millions of people over the last decade. This has facilitated an unprecedented ability to reach people quickly and easily without a physical presence.
India has also started the steady march towards the democratization of data. For years, companies have been gathering and storing consumer data without it being easily accessible by consumers themselves. But recently, consumer access to data has been growing. While currently limited to credit scores and reports provided by credit bureaux like Experian, CIBIL, CRIF and Equifax, the intent to launch the Public Credit Registry and the introduction of Open Banking will mean all of our data is available in one place.
So how will this drive credit awareness and penetration?
There are now a number of companies that provide you with your free credit score and report. They advertise heavily on TV and digitally, hence driving awareness about the existence of the data so that people can check it. This is done via websites or mobile applications, where the data will be available to you in a matter of minutes. Your credit score and report form a large part of a bank’s lending decision, so it’s very important for people to see – and verify for accuracy - what lenders can see.
While it doesn’t matter which credit score you check – they are all based on the same data - you should know what the benchmark for the scoring company is, so you know where you stand. Some businesses offer the Experian credit score, (780 being a good score), and others provide the CIBIL credit score (750 being a good score).
Once you’ve signed up to view your data, Chatbots (a technology enabled coaching tool) can educate you about how to build your score, how to improve it, how to maintain it and how to go about preparing to take your first loan. User friendly and engaging, the Chatbot aims to demystify personal finances for everyone. Given this is delivered digitally via mobile applications, it can be readily available to millions of people very easily. What’s more, you can interact with the Chatbot in a range of languages. While India has largely built websites in English, Hindi and other regional languages continue to serve the diverse population.
Credit scoring players use your data (securely and only with your consent) to show you the best credit products for your situation. Providing you with personalised options all in one place, they help to reduce the time you spend searching for and comparing different deals. Many of these products can help people to build their credit history if they haven’t used it in the past.
Hopefully you’re starting to see how powerful technology is in terms of distributing data. Technology helps people become more aware, and enables them to use that information to reduce clutter and confusion in order to make better financial choices. And the best part about all of this? These personalised services are completely free and are available to everyone.
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