Reported by: banking|Updated: November 15, 2020
The associated cost to process credit card and loan applications by banks has come down significantly:
BankBazaar was one of the first fintechs to realize the advantage of digital KYC and partner with leading banks and credit card issuers to facilitate contactless access to credit cards. Adhil Shetty, CEO of the firm, believes that contactless access to credit – meaning no meetings or paperwork – is the new normal, providing a way for consumers to access financial products in a safe and secure manner. “At BankBazaar, contactless solutions from partners are live and these have been launched in May 2020 during the slowdown. To me, this is a ground-breaking milestone for the Indian industry and lays the foundation for the future of credit delivery to every Indian consumer,” he says.
Video KYC’s Success
BankBazaar has seen measurable success in the use of video KYC by partner banks for identity verification in credit applications during covid. The video KYC solutions facilitated by the firm resulted in a steep fall in the time required by the partner banks to process the submitted applications. This led to a 20x increase in the number of applications each partner bank could process per day due to the benefits of digital KYC compared to the offline KYC process.
The use of digital KYC frees up valuable time and resources that would otherwise have been spent in traveling and document collection, allowing the lenders to reduce costs and increase efficiency, maintains Shetty, adding: “As a result, the banks’ associated cost to process credit card and loan applications has come down significantly, while the reach of these products has expanded to cover anyone in India with a mobile phone and internet services. Digital KYC provides significant time and cost advantage, making it an indispensable alternative.”
Being an online digital marketplace, technology has been the backbone of everything that BankBazaar does. For example, says Shetty, marketing activities are almost entirely online and it will continue to remain so for the near future.
Digital Lending: 100% Growth
With digital operations becoming extremely critical for the BFSI sector, Shetty points out that lenders are predicting close to 100% growth in digital lending by the end of this year. Digital KYC solutions make this vision both achievable and cost-effective, and BankBazaar is at the forefront of facilitating these solutions for partner banks, sys he.
“The lockdown slowed down the sector as well as our own plans for EBITDA profitability in March, but with the interest in and support for digital KYC solutions on the rise, we are looking to hit that mark by the end of this year,” he says.
Shetty sounds very optimistic when he says: “We see a clear-cut case for contactless finance. As customer preference for contactless digital services moves from shopping to education to tele-medicine, banking cannot afford to be left behind. Financial institutions, regulators, and the government need to work together to stay one step ahead so that the impact of any future disruption in services is minimal and financial services remain accessible at all times.”
Survey: Go Digital
One tough lesson that the pandemic taught everyone is that there is a crucial need to ensure that financial services remain accessible digitally at all times. This June, BankBazaar surveyed 1112 customers on the impact of covid on their personal finance management, and Shetty says: “The results are clear – save more, spend less, stay at home and go digital.”
Financial priorities have become more conservative in the post-covid world as discretionary spending falls, and savings and investment and debt repayments take precedence for most people. “This situation is expected to continue in the near future,” predicts Shetty, “as financial uncertainties mount due to pay cuts and job losses globally. Even when the economy begins recovery, spending patterns may never be entirely the same as before, primarily, due to the impact of social distancing on the way we consume everything from food to travel to entertainment.”
Digi Transactions Up
Consumers were increasingly turning to online finance even before the pandemic because of the convenience factor. Points out Shetty: “With the lockdown making social distancing a way of life, consumption has moved online, with wallet share of online transactions for more than 63% of respondents seeing a rise during this period. However, social distancing and safety concerns have forced people to rethink face-to-face interactions and move completely online for all their credit needs.”