A global revolution is taking place. It is bloodless, logical and more importantly, embraced by everyone. Including the ones deposed. Welcome to the new normal of digital disruption in financial technologies, commonly known as fintech.
Mobile and internet technology are transforming economies across the world. The digital adoption is rising and is only expected to leapfrog in the coming years.
Mobile phones deliver a powerful package of an distribution network, a credit rating and an address book of customers to BFSI companies. With this, financial services can enable even the poorest segments of society to fulfill their aspirations.
"When technology create disruptors, the disruptors create technology."
They can (and are already) do so by helping them buy assets with their earnings (no matter how small). These disruptive digital fintech technology is setting them on the path on becoming the new middle-class.
Disruption #1 End to end digital sales platform
The largest private lender in Asia implements a complete digital sales platform for its digital products including credit cards, loans (personal), insurance schemes etc. The platform captures relevant customer information entered by customers themselves (thus guaranteeing accuracy and establishing actual need). The whole deal is made more attractive with special rates for online customers.
The result? A 208% Increase in lead conversion (plus) 93% Improvement in sales turn-around-time (plus) 92% Increase in customer loyalty index.
Disruption #2 Rule based approval process for loans
A typical loan disbursal process is lengthy (from weeks to months), tedious with heavy human involvement. Even creditworthy individuals lose out on loans (mainly) due to biases. How about replacing the human factor with pre-defined and logical business rules that take into account facts and not biases. This is exactly what a leading auto finance company did.
The result? Loan processing time reduced from 3 days to less than 3 minutes.
Disruption #3 Self service through document upload and verification
Waiting in line was never fun, but frustrating. In fact, in Italy, people paid others (known as codista, the queuers) to take their place to stand in line for document submission and verification.
You don't have to go that far (not even to your branch). Customers can take snapshots of their documents, upload them to the financial services portal (which is linked to credit rating agencies) and get instantly verified.
The result? Queues gives away to instant response.
Disruption #4 Payment of insurance premiums through mobile topups
Insurance premiums bring into mind hefty sums paid through a tedious collection process. What if you pay a portion of the premium everyday through your mobile balance? You won't even feel the pinch of spending.
People are now enjoying safety through small numbers. Milvik, a microfinance company in Africa, is helping the poorest people get insurance coverage with premiums paid via mobile topups.
Disruption #5 Repayment of loans via mobile
Instead of paying hefting EMI amounts towards loans every month, how about paying minuscule amount via mobile everyday. Mobile money wallets like M-Kopa, M-Pesa allow borrowers to pay off loans in small amounts which gets credited quickly. Future lenders determine the credit worthiness based on the frequency of payments, [the faster (and consistent) repayment, the higher the rating].
At the end of repayment period, executives via CRM solutions connect with the borrowers and encourage them to upgrade to bigger assets. Thus, getting them started on the path to prosperity. The borrowers can get an extension if needed (at higher interest rates of course).
Digital fintech disruption in BFSI isn't just about creating new customers. It is also about connecting people to a better future with prosperity and safety.
Share your disruptive thoughts in the comments below.