<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-10-4.webp" alt="M2P Fintech" title="" id="9psuo4qu8" width="100%" height="284">Around the world, there are billions of people without access to structured and formal lending services. This category also includes those micro, small, and medium enterprises that struggle to stay afloat without timely financing.Fintech has identified these segments to be on the brink of a financial revolution, but there is a tiny hitch. For instance,<a class="link" href="https://m2pfintech.com/blog/digital-lending-open-credit-enablement-network/"> digital lending</a> institutions need to regroup their position on mastering the tech, utilizing data in identifying potential borrowers. Nevertheless, some lenders have made some headway in adopting alternative data models resulting in a cutback of credit losses and doubled application approvals.Post-COVID Credit Assessment for Unbanked SegmentThe impact of lending and borrowing on small and medium businesses and informal segments like single structures, migrant populations &amp; the unbanked segment is now seen as “Too risky.”This scenario gives rise to crucial problem statements that need to be addressed by various players in the formal financial ecosystem as below –<ul class="list-node" id="1e9xn2w3x"><li>Lack of structured and verifiable financial behavior data for MSMEs, small retailers, and even single entrepreneur set-ups</li><li>Physical <a class="link" href="https://m2pfintech.com/blog/know-your-customer-kyc-the-need-for-authentication/">KYC</a> verification challenges, especially if the borrower's name details, address, or any other criteria are mismatched against available sources</li><li>The financial inability of MSMEs to service and repay existing Loans (in effect) to avail any of the fresh or emergency credit</li><li>The prevalence of manual processes in risks and credit assessment of lenders and banks increases the chances of fraud, errors, omission, loan data exception, and oversight</li><li>Specifically, in the current scenario, as COVID 19 can be classified as an “ACT OF GOD,” this presents a rare loop-hole challenge for existing borrower data to be improperly / insufficiently benchmarked against existing lending product standards</li><li>One of the most ignored segments is the unbanked and under-banked segment (who can be classified as without an active bank account or a transaction presence for a minimum of 6 months)</li></ul>Credit Assessment Opportunities — Ecosystem Participation<ul class="list-node" id="zp19xq2a4"><li>Alternate scoring entities and solution providers need to capture and capitalize individual data through Telecom, Utilities, Taxation &amp; GST, Payments, E-commerce, and Location data</li><li><a class="link" href="https://m2pfintech.com/blog/account-aggregator-101-democratizing-data-access-and-sharing/">Account aggregators</a> will be a qualitative and quantitative complement disruptor for the credit assessment and provide holistic financial behavior data across participating Financial Information Providers (FIPs) and Financial Information Users (FIUs)</li><li>Credit repair entities will have an essential role in ensuring the impacted segments have access and transparent understanding to repair appropriate credit damage due to COVID</li></ul>So far, these pioneering efforts have sparked the unbanked credit assessment. They have brought forth massive opportunities for the sector, and the future looks promising.Want to know more about enabling digital credit? Then write to us at <a class="link" href="mailto:business@m2pfintech.com">business@m2pfintech.com</a><a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Credit Risk Model for Unbanked: Last-Mile Lending Enablement

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-8-19.webp" alt="M2P Fintech" title="" width="100%" height="284">Lending is a complex world where loan origination to disbursal is a sea of procedures. It involves tremendous efforts, time, and logistical investments from the loan seeker. Right from <a class="link" href="https://m2pfintech.com/blog/know-your-customer-kyc-the-need-for-authentication/">KYC</a> verification to document submission, loan application form &amp; user-setup, account mandates, amount sanction, and disbursement, end-use monitoring &amp; EMI/Principal collection, the entire life cycle of the loan is mostly offline.It paves the way for many instances of fraud/mis-governance, data input error, transaction failures, other issues, and loan closure inconsistencies. It also prevents many from seeking credit as they are wary of these cumbersome procedures.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-13.webp" alt="M2P Fintech" title="" id="jrpp3783x" width="100%" height="284"><h2 class="heading-node" id="25a0">Short story:</h2>Sunil is an MSME entrepreneur, residing in a semi-urban area called Bandipur. He ran a profitable electronic shop before being railroaded by the pandemic. The business faced a looming loss and a climbing expense due to strict lockdown measures. Since most of the lenders were in the urban or metropolitan cities, he had limited credit options.In fact, from March 2020, Sunil was finding ways to avail credit. He had made endless negotiations with lenders available, expecting a reasonable rate and term. It was a fruitless quest; Sunil had to get a loan from a lender named Roy Chatterjee, at very high interest. He completed all the steps from risk assessment, KYC verification, credit assessment, loan disbursement, and collection offline.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-9-1.webp" alt="M2P Fintech" title="" id="cs0vgyg4f" width="100%" height="284">In the process, Sunil discovered that having minimal or almost no digital facility in the loan application method had given him a suboptimal output. The lending life cycle was complex and filled with data input errors, transaction failures, and loan closure inconsistencies.He also arrived at the conclusions that:<ul class="list-node" id="anlqtu1sw"><li>The absence of data yielded him risky credit allocation and disbursement</li><li>Secondly, the lack of digital infrastructure led to increased inconvenience</li></ul>Owing to a lack of repayment data, the lender misleadingly showed several months of missed collection and charged more than the actual amount. So, Sunil ultimately had to shut down his business and sell his assets for loan closure.<blockquote class="block-node" id="cdewdrpee">What would have saved Sunil’s business?The availability of competitive&nbsp;Digital Credit or Lending Solutions&nbsp;from various lenders could have given Sunil the right credit options.Sunil’s dilemma is an example of the current MSME situation in India. The MSMEs are referred to as the&nbsp;Lost Middle&nbsp;as their needs are not addressed. Their distinct requirements fall between microcredit organizations like Micro-Finance Institutions (MFINs) and banks, thereby making them prey to secondary lending agencies who charge exorbitant interest rates and sometimes deceive. And that’s where platforms like OCEN comes in as a helping hand.</blockquote><img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-10-1.webp" alt="M2P Fintech" title="" id="p47fcaqn0" width="100%" height="284">OCEN stands for Open Credit Enablement Network. It aims to promote transparent loan origination and participation from categories of Education, e-commerce, Payment Aggregators, Fintechs, and NBFCs. This platform is designed to serve even niche customers or borrowers like Sunil.<h2 class="heading-node" id="6eff">OCEN- A premise</h2>Fundamentally, OCEN is the brainchild of iSpirt, Sahamati, and Credall. It is a digital lending solution that provides credit to customers having a credit history and provides micro-credit opportunities to people with no credit or bank transaction history. In short, the platform aims to improve and enable credit access to everyone.<h2 class="heading-node" id="58af">So, what does OCEN do?</h2>Generally, it targets to serve all possible borrower categories like personal, home loan, and business. Furthermore, it offers a marketplace model for loan offerings.OCEN aims to resolve the major problems by emphasizing Digital-Only assessment, sanction, and disbursement of loans to borrowers. It supports borrower and lender usage monitoring, thereby ensuring a 360° data collection and analysis.Digital lending can prevent mis-governance or fraudulent loan practices by both the parties — loan seeker and loan provider.<h2 class="heading-node" id="c81c">OCEN — The Ultimate Platform for MSMEs</h2>OCEN is best suitable for MSMEs because its open protocols will ignite further innovation at each step of the loan process. Furthermore, it will help to democratize credit.&nbsp;It can even ensure that every service provider offers credit by just plugging into the platform.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-11.webp" alt="M2P Fintech" title="" id="97zo19bd8" width="100%" height="284"><h2 class="heading-node" id="2ff3">Will OCEN solves the struggle of MSMEs?</h2>Yes. It can rapidly increase credit availability to enterprises that are already digitized to a greater extent. For other MSMEs that operate in a minimum data zone or with a low digital base, lenders need to utilize the physical and digital infrastructure and channels. Simply put, overcoming data errors or discrepancies for companies with a minimum digital capability is still an issue to be addressed.<h2 class="heading-node" id="6ff8">The Future Journey of OCEN</h2>OCEN is expecting to terra-form the credit landscape in the coming months and years ahead. It will allow small businesses to avail credit in real-time. Whether its supply chain finance for broad/long term or instant-short term credit or any other trade-specific condition, you could anticipate a sea-change transformation in the more extensive credit process.The next visible step in OCEN — is the significance and authorization of Loan Service Providers (LSP) categories. Finally, the rationale behind the digitalization of lending and the Open Credit Enablement Network is to make “Credit for Everyone”&nbsp;a reality.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.Author- <a class="link au nn" href="https://medium.com/@abhishek.mody" rel="noopener">Abhishek Mody</a>

Digital Lending — Open Credit Enablement Network

<blockquote class="block-node" id="musdo3dd7"><img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-8-2-4.webp" alt="M2P Fintech" title="" id="cwegdj29x" width="100%" height="351">What if I told you Fintech dates back to half a century? And it’s not a buzz word conjured up in the present, but one of the most disruptive technologies of the last five decades.Ready to explore the unchartered waters of <a class="link" href="https://m2pfintech.com/blog/fintech-a-catalyst-for-financial-inclusion/">Fintech</a>?</blockquote> Then let me take you through a timeline:<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-13-1.webp" alt="M2P Fintech" title="" id="q5nkj7fnh" width="100%" height="358">So, now you know that right from checking your recent transaction via a banking app to scanning a QR to pay, everything is a classic use case of everyday Fintech.Indeed, today’s Fintech products and new business models are the results of the latest technologies disrupting traditional financial services such as investments, insurance, trading, <a class="link" href="https://m2pfintech.com/blog/digital-lending-open-credit-enablement-network/">lending</a>, and <a class="link" href="https://m2pfintech.com/blog/banking-as-a-service-redefining-financial-services/">banking.</a>What is Fintech? How is it categorized?The term Fintech stands for Financial Technology. The application of programming, analytics, and technology to financial services and banking has brought forth an unimaginable revolution called Fintech. In short, you can say Finance + technology = Fintech.Moreover, in the last decade, the Fintech industry has gone through a wave of innovation. It has created new journeys for banks and businesses and transformed the way you pay, lend, borrow, save, invest, insure, and so on.From <a class="link" href="https://m2pfintech.com/blog/ready-to-sneak-peek-into-global-cashless-societies/">cashless</a> payments to<a class="link" href="https://m2pfintech.com/blog/digital-lending-open-credit-enablement-network/"> digital lending</a>, from crowdfunding to <a class="link" href="https://m2pfintech.com/blog/all-you-need-to-know-about-virtual-cards/">virtual currencies</a>, from mobile banking to robot advisors, everything falls under this umbrella. All in all, you can conclude that it has touched almost all the verticals of the financial sector. Its sub-domains include Paytech, Bankingtech, Lendtech,<a class="link" href="https://m2pfintech.com/blog/insurtech-the-changing-facets-of-the-insurance-industry/"> Insurtech,</a> Wealthtech and Regtech.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-12-1.webp" alt="M2P Fintech" title="" id="q4o7m888l" width="100%" height="358"><h2 class="heading-node" id="ed70" style="text-align: justify">A Sneak Peek into the Onset of Fintech Globally and in India</h2>Right from 1950, <a class="link" href="https://m2pfintech.com/blog/fintech-a-catalyst-for-financial-inclusion/">Fintech</a> has gone through many tremendous changes and growth by easing the lives of millions of customers worldwide. However, the latest Fintech boom can be attributed quite well to the new technology advancements and evident global events.To explain further, let me show you three striking realities that triggered the sky-rocketing growth of Fintech.<ul class="list-node" id="z6ujlvxil"><li>The infamous credit crisis of 2008 forced financial institutions to focus heavily on regulation and triggered innovation. To overcome this lag and to close the existing tech gap, many firms started developing mobile-first, <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">API</a>-enabled, and AI-driven bank solutions.</li><li>The 2016 Demonetization bolstered the usage of banking apps and digital payments. After this incident, the Indian Fintech start-up ecosystem grew at a faster rate and became a strong contributor.</li><li>The 2020 COVID Pandemic has made digital transfers a necessity rather than a convenience. For instance, online renewal payments for insurance has seen a considerable uptick globally.</li></ul><img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-11-5.webp" alt="M2P Fintech" title="" width="100%" height="358">In simple words, Fintech has made the overall customer experience more straightforward and comfortable.Why do we need Fintech?When you observe traditional insurance, lending, and banking firms globally, you discover a common thing these legacy firms have. It is nothing but a vast pool of untapped customers and complicated processes. Fintechs act as a helping hand to serve these overlooked and overwrought customers.To elaborate, here is a sneak peek of these potential customer clusters:<ul class="list-node" id="1xbnvgudo"><li>Thousands of customers without bank accounts and with smartphones</li><li>Many authentic borrowers with a low credit score or bad credit history</li><li>More professionals wanting to manage their personal finance</li><li>Consumers looking for personalized insurance products</li><li>Many customers trusting robot-advisors over wealth managers and so on</li></ul>Further, they also simplify the process and make financial services more accessible.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-9-5.webp" alt="M2P Fintech" title="" id="oumayvwhq" width="100%" height="358">Fintechs today are breaking the mold by developing dedicated digital solutions for them, such as mobile banking, lending without banks, peer-to-peer borrowing/lending, payment APIs, and so on. In short, they are striving to create a much-awaited financial inclusion across economies.As customer adoption rates are higher than usual, many start-ups and investors today are exploring many facets of fintech inclusion. With countless Fintech enthusiasts around the corner, there’s no wonder why unique lending capabilities and payment technologies are emerging every day.The Ones to Watch: FintechTo sum it up, Fintech SaaS has the potential to transform consumer relationship with money. You can also think of Fintech as a <a class="link" href="https://m2pfintech.com/blog/banking-as-a-service-redefining-financial-services/">Bank-as-a-Service</a> version of traditional banking.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-10-3-1.webp" alt="M2P Fintech" title="" width="100%" height="358">Nevertheless, it can and will set the landscape of future banking and financial services. It is an ongoing journey, and emerging products will always be the result of regulations (banks), innovations (fintech), and customizations (end-user).Remember, it is more than a technology or a business model; It touches lives and makes incredible advances. If you want to keep track of something disruptive in the future, then Fintech is the one to watch.Want to know more about fintech, write to us at <a class="link" href="mailto:business@m2pfintech.com">business@m2pfintech.com</a>.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Fintech 101 — Discover the 3W’s of Fintech

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-8-16.webp" alt="M2P Fintech" title="" width="100%" height="383"><blockquote class="block-node" id="taxe2h50t">UPI transactions clock 1.61 billion transactions worth Rs 2.98 trillion in AugustDigital payments up by 23% with transactions valuing at a record high of $113.4 Trillion</blockquote>Source- Business Standard<blockquote class="block-node" id="osu78ucl8">India will provide approx. 2.2% of the world’s digital payment by 2023 — Pwc &amp; PCI</blockquote>Amazing right! In the race between digital payments vs. cash, the former is definitely taking the lead. Right from a cash-dependent economy to cashless transactions, we slowly see the shift. This trend is now fueled by the pandemic, COVID-19. Starting right from cards to UPI, digital payments have taken over in both online and offline methods. Nevertheless, UPI payments are setting up a record high as 1.61 billion transactions.But this is not the first time that digital payments have seen a spike in our country. The history-defining move of Demonetization brought digital payments to the fore. Many opened bank accounts or started using their bank accounts for depositing their cash reserves. Incidentally, it also prompted many to dust their debit cards.Soon, several incentives and schemes were introduced to encourage this transition. Also, the year 2016 saw a significant milestone with the introduction of UPI in August. Coupled with the availability of the internet, digital payments had the right boost. Starting from grocery stores to street vendors, UPI, and other modes of digital payments had taken root.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-10.webp" alt="M2P Fintech" title="" id="ah9a6k969" width="100%" height="383">It was a great learning curve, with many technology players coming to the forefront. Innovating payments and user experience became a priority. But after a while, the spike plummeted as currency notes and coins rose in circulation.Now, the onset of the pandemic and nation-wide lockdown has made people embrace digital payments. The pandemic has also brought forth a two-pronged result where businesses are going digital, and some are losing their footing. But, the retail section seems to have stayed afloat by going digital. So, what took four years to adopt is now the norm within months of lockdown. With new customers on the rise, merchants are currently searching for tailored and localized payment solutions.COVID has pushed people to adopt online shopping where digital payments rule and cash on delivery is frowned upon. Even those who are tactile by nature are now supporters of online shopping. Online grocery shopping is now on an all-time high with e-commerce spearheading the cause.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-9.webp" alt="M2P Fintech" title="" id="s6b81zced" width="100%" height="383">So, it puts forth the question of how digital payments got back their spotlight?COVID has made people wary of physical contact, so digital payments were the only solution. Also, here are a few more points that answer the above question:<ol class="list-node" id="erdc35dw2"><li>It requires minimal or zero contact. Minimal contact if it is cards and zero contact if paying through UPI or mobile wallets.</li><li>You don’t need to carry a loaded wallet as right from cab drivers to popular stores, digital payments are available.</li><li>Forget rummaging around for change; your card or wallet will let you pay the exact amount.</li><li>It is there 24/7, and you don’t need to spend long hours outside the ATM standing in those social distancing circles patiently waiting for your turn.</li></ol>Recently, a study conducted by The Red Seer Consulting deduced that India’s digital payment will reach Rs.7,092 trillion by 2025. And that is not all; Digital payments are now the favored choice of the millennials. They have gone through a shift of reluctant usage to a must-have tool for every day.To know more digital payments write to us at <a class="link au mg" href="mailto:business@m2pfintech.com" target="_blank" rel="noopener ugc nofollow">business@m2pfintech.com</a>.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.