NBFC and housing finance companies: riding the technology wave



2020 has been an extremely difficult year for the financial services industry, especially given the global economic slowdown, coupled with stressed borrowers and a shortage of liquidity in the market. The situation, however, presented a unique opportunity for non-bank financial corporations (NBFCs) and housing finance companies (HFCs). As central banks around the world work to neutralize the economic impact of the pandemic through new regulations and loan subsidies, the need for nimble, non-traditional financial institutions grows.

NBFC and HFCs are the answer, with their digitally driven approach to providing flexible financing, delivering new products in a timely manner, and reaching a wider range of banking customers. In fact, recent research has suggested that NBFCs are expected to increase their assets by 7-9% in 2022, while HFCs are expected to increase by 10% over the same period.

The evolution of NBFCs and HFCs

NBFCs have generally focused on traditionally underserved or unserved market sectors, be they individuals or businesses. However, they seem to be increasingly shifting their energies towards developing innovative products, building strategic partnerships with fintechs, and catering to low-income clients clustered in unorganized sectors, while minimizing operational and cost costs. customer acquisition.

In order to carry out these initiatives, NBFCs and HFCs are investing in modernized business models, powered by a variety of new era technologies, to enable the seamless design, launch and implementation of unique products and services and personalized.

In an effort to cater to a wider range of customers, NBFCs and HFCs plan to digitally transform their end-to-end processes, differentiating themselves from incumbent banks and delivering a superior experience.

How emerging technologies are transforming NBFCs and HFCs

By implementing a wide range of modern technologies including artificial intelligence (AI), machine learning (ML), robotic process automation (RPA), mobility, predictive analytics, chatbots and blockchain, NBFCs and HFCs are completely redefining the way they deal with internal and external customers.

By accelerating their digitization efforts, NBFCs and HFCs can enable:

  • Remote customer interactions, via KYC video and eSignatures
  • Anytime, anywhere accessibility with mobile apps and self-service portals
  • Contextual, personalized and omnichannel engagement with customers
  • Streamlined operational workflows for increased productivity, accuracy and profitability
  • Alternative credit scoring models to give non-traditional clients financial freedom
  • Increased data security, using distributed ledger technologies
  • · And much more!

However, many NBFCs and HFCs currently lack the necessary infrastructure to effectively modernize their operations and take advantage of these new era technologies.

How can NBFCs and HFCs gain a competitive advantage?

The Need of the Hour is a robust platform-based solution that can enable NBFCs and HFCs to implement the right mix of technologies, backed by an agile IT framework.

Such a solution should be able to support:

  • Instant loan disbursement via open API banking
  • Loan disbursement on mobile or portal
  • AI-based credit scoring
  • Online services on low-end mobile phones
  • · Many languages
  • Real-time access to relevant information, to facilitate rapid processing by backend teams
  • Collaboration and reporting by several agents, simultaneously
  • The unique needs of NBFCs and HFCs

NBFCs and HFCs have the potential to gain a significant advantage over their traditional banking counterparts by rapidly adopting new era technologies. A platform-based solution can help them optimize their resources and processes, expand their customer base to reach a wider socio-economic audience, leverage strategic partnerships and increase their revenue, all while remaining risk-free. , compliant and competitive.

The views expressed in this article are the personal opinion of Jayant Tandon, Head of Banking Excellence at Newgen Software.

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