Post the pandemic outbreak, India reported 60 percent rise in Fintech investments to $1467 million in H12020 as compared to the $919 million for the corresponding period the previous year. According to a research report released by RBSA Advisors, independent Transaction Advisory firm, India has emerged as Asia’s topmost destination for FinTech deals, With around 33 deals valued at $647.5 million, India has the highest investment in the FinTech segment compared to China’s $284.9 million during the quarter ended June 30, 2020. To understand the opportunity associated with Fintech in the country and their rising significance in terms of collaboration with financial institutions, Rashi Aditi Ghosh of Elets News Network (ENN) interacted with Abhinav Sinha, Co-Founder, Eko
1. Give us an overview of your services. What makes Eko unique?
Eko is one of the fastest-growing fintech platforms in India that gives ‘first time credit’ access to ambitious sellers. The one-stop platform for micro-businesses operates with a distinctive set of products and services, including the Eko Platform Services and Eko Store. The Eko Platform Services open APIs to help small software/fintech companies to build their own fintech products. Eko Store, distributed over the network of 2 Lakhs sellers, allows sellers to distribute various products & services in their customer network using Eko’s app or any other apps built on EPS. Through this network of EPS partners and Eko sellers, millions of transactions are facilitated through the platform.
Eko uniquely leverages the transaction and demographic data to give access to first-time credit to its sellers. Millions of data points feed in a proprietary ML-driven underwriting model that qualifies the amount of credit and the sellers who can be offered. Since the large network of sellers uses Eko’s platform, it gives Eko a unique opportunity to enable daily repayments and therefore offers loans of durations as short as 1 day.
2. In your view, how important is fintech collaboration for Financial Institutions in India?
We think it’s really important for financial institutions to be at the forefront of new technologies, offer relevant products for the ever-demanding consumer and a seamless customer experience and fin-techs can be worthy partners for financial institutions in their quest. Financial institutions can leverage their strengths of balance sheet, physical distribution, low cost and trust and complement them with fintechs superior technology, user experience, design, digital marketing and other capabilities. We believe fintech and financial institutions collaboration has a lot of ingredients to become a successful marriage
3. Covid has accelerated the digital push in FIs. What help can the Fintechs offer in this regard?
Given the lockdowns that happened due to the pandemic, fintechs can offer financial institutions expertise in acquiring customers digitally both on the liability and asset side and serving them without any physical involvement whether it be payments, disbursement, repayments, general service etc.
Given the pandemic has brought about a lot of financial stress to the borrowers, traditional underwriting models reliant on bureau, bank statements by financial institutions can be complemented by the underwriting models built by fintechs looking at alternate data like engagement metrics, social media profiling, transaction data etc. to not only gauge the repayment ability but also the repayment willingness
4. Concepts like digital lending are fast gaining popularity in the country. What opportunities do you see associated with them?
We see huge opportunities both on the consumer side and the MSME side. Schemes like BNPL have already gained a lot of traction in the past few months and we think we will see a lot of new offerings customized for the borrower and tailored to the cash-flows of the borrowers coming to the market.
This will accelerate the national financial inclusion initiatives undertaken by the government and RBI in bringing credit to under-banked and unbanked borrowers. With smartphone and internet penetration increasing, the amount of data available for a borrower will only increase and smart analytics on that will allow fintech and financial institutions to build smarter and relevant products for customers
We also see digital lending playing a key role in improving the digital and financial literacy of the borrower, making them understand the benefits of making repayments on time, the importance of credit score, and help them make wiser financial decisions
5. How hopeful are you about the concept of Neo banking? Is India ready for it?
Neo banking holds a lot of promise and potential especially for millennials and Generation Z Offering customers a suite of financial products digitally spanning multiple areas like deposits, cards, lending, wealth management tools etc. can bring a lot of ease for customers to meet their financial needs and desires without visiting a branch or any other physical location
We believe that COVID has accelerated the technology adoption amongst all age classes and people will be willing to experiment with neo banks, however, it will take time for neo-banks to build their trust and the brand with customers to go beyond experimentation and make them their one-stop source for all financial needs. We see neo-banks becoming more relevant for certain kinds of financial transactions initially particularly payments, cross-border remittances before gaining a foothold in other areas
India is in a very strong position to leverage the benefits and has all the right ingredients especially with the success of India Stack (Aadhaar, eKYC, UPI, Digilocker, etc.). Innovations like video KYC are also being promoted by the regulators and we are seeing large growth in the borrowers that are engaging digitally even with the traditional financial institutions.