How are Credit Demands Met and Loan Collections Simplified in Fintech

It has been more than a year since the pandemic struck our country which led to two lockdowns in the nation. Businesses disrupted during this period. Traditional funding sources started to dry up. People started looking for alternatives which could fill up the gap between the demand of liquid cash and its availability. The MSME sector contributes significantly to the country's GDP and this sector saw a big fall after the lockdown commenced. Millions of people lost their jobs, many faced salary cuts and medical expenses rose like never before.

During these tough times, fintechs are playing a major role in the revival of the economy by meeting the urgent demand for working capitals, making special support plans and altering the credit score models. Innovative capabilities of fintech companies have transformed the lending business completely and made the credits easily accessible to the people who are using digital technology. They just need to download the app and a few clicks on their mobile phone or laptop and they can avail a secured or unsecured loan without any tedious manual process. This has resulted in the tremendous hike in the demand for business loans as well as instant personal loan. Because of this an upward trend has been seen in the digital lending market but at the same time the question arises how fintech companies ensure timely collection of these loans. During these testing times, innovation, empathy and proactiveness is the answer.

Let us understand how the fintech companies have been helping MSMEs by providing unique credit solutions:

Digital Involvement

Amid pandemic, digital process has emerged as a safer way for lenders and borrowers both as no physical meets are required this way and business continuity is also ensured. Due to the digital process the whole lending and collection experience has become so seamless, convenient and hassle free now. No manual paperwork and numerous visits to the offices and banks are required now, which saves the time and energy of both the parties.

Multiple Payment Methods

Traditional lenders still demand cheques or cash as the payment method. On the other hand these fintech companies pose no such restrictions. You have plenty of payment methods which you can use to repay your loans. Availability of multiple payment options has made the process of making and receiving payments easier and stress free. You can use any of the methods such as NEFT, IMPS, debit cards or the payment apps like Freecharge, Paytm, GPay, Phonepe, etc. The availability of these multiple options have made the customers flexible.

Customization of Lending and  Repayment Strategies

Disruption in businesses and risk of NPAs has increased due to the pandemic. Although moratorium had provided some relief to the affected businesses but it was important and quite necessary for the financial companies to ensure that their customers are not suffocated with loan repayments at the end of the moratorium. So they needed to come up with some new strategies of collection.

 If we take the example of hotels and gyms, they were among last to be allowed to restart their businesses post lockdown. So, we can easily understand that they were not in the position to repay their loan amounts. At this time, the fintech companies rolled out their customized the ways to resolve the issue. The current EMIs were lowered down for such customers and their installments were increased post recovery. Repayment tenures were also increased for a longer period of time.

 This policy came as a breather for the businesses when they were battling to recover as they got some more time to  bounce back to normalcy. Fintechs also used their data sources to study the post lockdown behavior of the various industries, how they were working, their customer base, their sales and profits, which helped them to understand clearly the current financial status of their customer, how was their business going, what are the effects of the pandemics on them. All this information helped the fintechs to draw some industry specific solutions, which benefited the lenders and the borrowers both.

Easy secured and unsecured loans are also being provided to those who have good credit scores and a good credit history. 

Consistent Communication

The key to maintaining a healthy relationship with the customers is to stay in constant touch with them. By doing this they will be able to understand the customer’s market position and offer them the restructured repayment plan which empathizes with them in place of pushing them to the brink of breaking down under the pressure of repaying their loans as soon as possible.

Use of Automated Process

Fintechs are using services like auto-dialer and artificial intelligence to call the customers whose due date is near or already missed. For this automated system, they just need to login to a system which has all the details of the customers. It automatically starts calling the customers to remind them of their payments. This system helps in saving a lot of time, improves productivity and efficiency.

There is no doubt that the fintech industry is growing rapidly during the past few years. Digitization has opened new horizons for these companies. Their customized plans are not only benefiting the urban customers but Many semi-urban and rural customers have also started approaching these companies. So, innovation, agility and constant communication is the key to remain in the market.

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