Financial inclusion through fintechs

By helping to eliminate information asymmetry across the user journey, fintech has made the equitable distribution of financial services easier. This ensures better inclusivity.

Technology has been the cornerstone of ensuring sustainable as well as scalable solutions for the financial services ecosystem. Insurtech — often considered the final frontier of fintech disruption — has been flourishing over the past decade. Right from product discovery to underwriting norms, from risk assessment to claim settlement, technology has aided a frictionless and meticulous workflow across the insurance value chain.

The next obvious step is to take technology to the masses by making it more adaptable and accessible. This is where financial inclusion through fintechs comes into the picture. Today, we have a heterogeneous market that no longer needs to follow the developed markets.

Conventionally, the role of technology was perceived to be a facilitator to access products and services. However, in an industry as complex as financial services, the role of technology goes way beyond. Given the risks associated with its verticals, technology integration today not only acts as an interface, but also as an enabler of credibility and transparency for the end-consumer.

By helping to eliminate information asymmetry across the user journey, fintech has made the equitable distribution of financial services much easier. This, in turn, ensures better inclusivity and adoption in the ecosystem. This is a game-changer for products like insurance, which have belonged to the push products category for decades. Fintech is empowering the consumer to take charge of their financial decisions and take a proactive approach towards financial safety and security.

The purpose of fintech goes beyond cost reduction or technology provision to building a lasting institution encompassing the entire customer journey. Technological innovations like UPI are rapidly unifying financial services in India and have put us on the global map.

The cost of disintermediation in the Indian economy is among the lowest in the world. These developments point towards a brighter future for financial services in India.  If we consider insurance, rapid internet penetration has propelled far-reaching awareness, especially in smaller cities, to help consumers make informed decisions regarding insurance products. This awareness is not just limited to pure protection products, but also insurance-cum-investment products for wealth creation.

Large-scale digitisation is redefining the approach to financial services and this is visible in tier-II and tier-III cities gradually shifting away from traditional processes. The potential of fintech in rural areas is further being leveraged by extending operational capabilities through a mix of online and offline channels as well.

When we talk about inclusivity, it is not limited to just the geographic but also includes the demographic aspect of the consumer. While it’s heartening to see awareness levels grow beyond metropolitan areas, it’s also important to connect with the new-age millennial and Gen-Z consumer segment. While technology accessibility or adoption is not an issue with them, information overload often leads to difficulty in making the right decision. Keeping their needs in view, products are being crafted to cater to their needs.

For instance, consumer insights reveal millennials’ preference for short-term savings products that generate a high rate of return. So, now such plans are being launched to accommodate their needs. Even with coverage in protection products, providing riders like OPD (Outpatient Department) cover or mandating mental health coverage in health insurance makes insurance more relatable for them. There are attractive benefits like gym memberships or wellness points embedded in policies to truly make insurance inclusive for all. The digital distribution and ease of online access are further helping scale the adoption.

Digitisation has revolutionised the way consumers access financial services, thereby positively impacting the financial services sector. The trackability of the digital medium has been pivotal in fast-tracking the growth of the sector. Going forward, the biggest potential trends driving key strategies for fintech would be consumer engagement, large-scale digitisation and leveraging data to understand the consumer.

The writer is chief executive officer and co-founder, Policybazaar.com