Though every bank is talking about disbursing loans in 30 seconds, the reality is not the same for all potential borrowers. There is a big chunk of Indian Citizens who are adversely impacted by the bank’s risk model and are not able to avail the banking facilities. This rejection shapes and supports their perception that the banks are not their friends and so they prefer to go to the local pawn shop.
Low-income families and small businesses are concerned about this financial exclusion in urban and rural areas. Obtaining loans and making payments can be a confusing time-consuming, and energy-draining process for a large number of customers. And it includes even those who anticipate a “yes”,
To do this the banks need to reimagine the ways to do the following three things to create the value-based Experience and do the Business of Relevance with all of their potential customers
- Create a Strategy to include and empower the Low-Income Population as potential retail customers
- Reduce the friction and time wastage around payments
- Embrace Technology to collaborate with the customers
All these customers face the following challenges:
- Confusing Application Process
- Complicated terms and conditions
- Lots of documentation and duplicative documentation
- Unclear credit criteria
- “One-size-fits-all” products
To provide financial inclusion, banks need to develop new credit products and risk frameworks to provide credit access to lower-income strata and rural populations.
The one thing which helps the banks to do is how much are they motivated to reimagine these customers’ past credit Experiences and prepared to create a value-based experience for them.
