India stands at an inflexion point in financial services, rapidly transitioning from a data-poor to a data-rich economy. This transformation, driven by the proliferation of digital infrastructure, smartphone penetration, and innovative technologies like AI, presents immense opportunities to expand access to credit across all segments of society.
However, “bad behaviour by lenders” poses one of the biggest threats to sustainable growth, according to Sudipta Roy, MD and CEO of LFB Finance Holdings. “Irresponsible behaviour by financial services participants is the biggest threat,” he said. The global financial crisis demonstrated what happens when lenders take on excessive risk. Self-regulation and ensuring loans are tailored to borrowers’ means will be key.
The RBI has played an important supervisory role. “As a country, we are getting our regulatory act together,” noted Roy. But ultimately, “it is incumbent upon [lenders] to follow that in letter and spirit.”
“This is a similar moment” to the success of UPI in bringing together regulators, banks and fintechs, said Deeksha Kaushal, Director of Banking and Financial Services Partnerships, Gpay, “Partnership is the way forward and responsible credit is the way forward.”
New data streams and infrastructure are enabling loans to previously excluded groups. “Cash earnings today are getting digitized, getting recorded in bank statements, and therefore lenders have access to this data,” Kaushal explained. Integrating and analyzing data can facilitate “responsible credit” and empower consumers.
For example, Google Pay recently launched a credit score feature. “It helps users be on top of their credit health,” said Kaushal. Over 40 million people have already signed up.
Small business loans also hold huge potential. “Our customers when we do bureau checks, 40-45% don’t have a score,” said Himanshu Chakrawarti, CEO, of Snapdeal. That leaves plenty of room for first-time borrowers among Snapdeal’s seller base to access formal credit.
Consumer lending is also expected to explode with e-commerce. “The next 200 million [online shoppers] has to come from the other 600 million who are already having smartphones but not shopping online,” Chakrwarti explained. Financial services will enable Snapdeal to boost margins on small-ticket, low-margin purchases from value-conscious consumers.
However, bad loans are not the only risk. As Rajesh Chopra, Senior Vice President & Head of Advisors, South Asia, Mastercard noted, “It’s not about mass marketing, it’s about relevance.” Even with advantageous data sets, failing to deeply understand different segments risks losing relevancy.
“People will be very conservative” in sharing personal data, cautioned Chopra. Building digital experiences grounded in transparency and trust will be crucial. If users feel exploited, they will disengage.
The panellists concurred that a hybrid high-tech, high-touch approach is needed. AI will drive huge efficiency gains in the future, per Roy. But as Chopra argued, a large role remains for communicators to educate consumers about products and data usage.
The takeaway: India is poised for a lending boom spurred by tech-enabled innovation. But sustainable, inclusive growth hinges on lenders emphasizing responsibility, not just transaction volumes. Maintaining high ethical standards and truly understanding diverse consumer groups will separate winners from those left behind in this data-driven era.
