In your opinion, what will the next wave of financial innovations look like?
The next wave of financial innovations will be the ones that enable financial inclusion that will transcend the limitations of Location, Literacy, Livelihood and Lending History. So at Vivifi, we have already embraced vernacular language interfaces to expand our reach and diminish the barriers for credit access but we are going to totally demolish the literacy/educational barriers for accessing credit by moving toward completely remote and form-less (form-free) onboarding that will based on Video, Voice and Images and a KYC process that is already completely remote and Video-based.
We are also swiftly building on a hybrid acquisition model which combines digital onboarding with assisted on-boarding where the existing stores and merchants will leverage our digital infrastructure to onboard customers irrespective of their location be it Tier-1, Tier-2, Tier-3 cities, Semi-Urban or Rural areas. I also see a broad trend that will accelerate the inclusion wherein technology and real-time data access will be universal and true innovation will be on credit products and customer segments.
A prime example is an initiative like Open Credit Enablement Network (OCEN) that will create new paradigm in lending by standardizing and organizing all the traditional data with scores of alternate data and provide a universal platform to Lending Companies in a true marketplace environment that will overcome the limitations related to livelihoods and lending history.
Digital lending has been hit hard on the demand and supply side. Do you see this as a temporary downtick, or will borrowing increase in the future to pre-Covid levels?
The Covid-19 pandemic has hit every sector of economy hard leading to widespread destruction of demand and resultant effect on employment with job cuts and pay cuts. This has adversely effected the entire Lending Industry and the Digital lending space is not immune to the same, especially with well-intentioned measures like loan payment moratoriums that have provided relief to the customers as they battle through public health crisis and its economic impact. However, I firmly believe this downtrend is just temporary and we are already witnessing green shoots both on the supply and demand side.
We fully expect the future borrowings to increase in Digital Lending not only to the pre-Covid levels but also to a volume twice of thrice that within the next 18-24 months. In many ways, the pandemic has brought into full-focus what is already the core for any Digital Lending company like ours wherein the customers have a completely digital on-boarding, remote video-based KYC and an e-signature process for the agreements.
Our current processes have also ensured completely digital payments and collections. The core strengths of a Fintech NBFC like us will be the reality of every lending entity in the future be it the traditional NBFCs or bank as the pandemic has now created an irreversible trend where the customers in general prefer to do most of the things from the comfort of their home on a mobile phone. In the years that follow we will see the pandemic as the black swan event that transformed most lending to Digital Lending.
What are the noteworthy trends you believe will impact the industry in the medium to long term?
As India will emerge from the Pandemic and be back on the track to grow to be a 5 trillion-dollar economy it will be driven by Indian consumers across the economic spectrum. This can be achieved only on the back of universal retail credit that aids consumption. which needs to be modeled on credit card like experience and not on Term Loan like products which dominate the Indian unsecured consumer lending market. The economic growth in USA post-Vietnam war was driven by availability of retail credit cards that drove consumption and we at Vivifi believe that it will be no different for India and have recently launched FlexPay – India’s first universally accepted digital credit card that offers sachet-sized credit from as low as Rs.1000.
FlexPay is geared to provide under-served customers as well as prime customers a ubiquitous, contactless credit that for the first-time in India will be accepted by every Merchant from small kirana stores to the large online players, every biller from Utility Providers to Schools as well as make peer to peer payments like rent to landlords or go Dutch with friends as it is leveraging the sophisticated payments infrastructure in UPI 2.0 to offer this credit.