October 21, 2022


Technical advancement took many industries to the next level by letting them grab a plethora of growth opportunities. The financial sector is not an exception. Technology advancement also transformed various financial institutions such as NBFCs.

These institutions also witnessed numerous benefits of various emerging technologies.

In this blog, we will help you understand the importance of digitalization in NBFCs by explaining its certain advantages.

In today’s time, regulation is something that has become more rigid. As far as the cost is concerned, it’s also going up. This is the reason why it has become necessary for many non-banking financial organizations to sharpen their business agility.

Well, it’s a fact that customers are one of the crucial facets of numerous businesses and also became the focus for those of NBFCs for differentiating. You will come across many NBFCs that are indeed interested when it comes to developing various innovative products.

Many NBFCs nowadays aim to match the requirements of those urban customers who have low incomes. It becomes quite essential for the NBFCs to adopt a perfect business model that is driven by various emerging technologies.

Well, it’s a fact that customers of late have become more tech-savvy. You will also come across the newer demands of credit facilities, especially with the increasing knowledge of customers in the repository.

Therefore, these institutions must match the core needs of today’s tech-savvy customers. They need to find the regular and traditional approach and also need to be ready for technological capabilities and digitalization that enable them to connect with customers. Besides, it also serves the needs of customers in a personalized way.

Another important reason why digitization is crucial is due to many private, as well as public banks, being quite distressed by bad loans in the last couple of years. And it indeed brought great opportunities for those of NBFCs to serve their offerings and also focus on growth.  In the last couple of years, NBFCs have witnessed remarkable growth. 

To achieve more targeted growth, they should rely more on various emerging technologies. 

Top Advantages of Digitalization in NBFCs

Now, let’s take a look at the various advantages of digitalization in NBFCs.

1. Minimize Risk

One of the major advantages of the digitalization of NBFCs is that it reduces risk especially in dealing with cash by adapting to those digital modes of payment. Customers, on the other hand, can also make proper utilization of the process of doing payments with the help of a fully safe and secure medium. It saves them both time and effort when it comes to the collection of money.

2. Customer Data Management and Acquisition

NBFCs often target to serve those customers that are not often served by those many commercial banks. It allows NBFCs to spend a lot. It also helps them be aware of their target customers and can assist them to maximize their reach.

Apart from this, digitalization enables them to analyze, capture and use data while maintaining higher accuracy for both potential and current clients. It helps them know their customers in a better way and also make the right lending decisions. 

3. Outstanding Customer Service

Today, you can see NBFCs make financial transactions in bulk for disbursing loans to various people. The credit goes to digital lending that helps in offering outstanding customer service as loan processing tends to be performed quickly with the availability of vast customer data. 

It also brings an opportunity for NBFCs for connecting with their customers by also sharing various messages in a fully personalized way in terms of loan bill payment reminders, sending a financial statement, etc. It’s also helpful in building a great relationship between these institutions and their customers.

4. Improved Customers Reach, Base, and Expansion

Technology is something that plays a crucial role in helping these financial institutions to reach out and target their customers, especially those who are not easy to reach. It helps these financial institutions to attract more and more people and offer them every facility and the required service that they need.

Once NBFCs adopt digitalization, it gets complete access to a range of networks since technology tends to bring together those financial institutions, consumers, and also various merchants.

5. Improve Operational Efficiency and Minimize Cost

The credit goes to various cutting-edge technologies that make business operations quite easy for various institutions and also the same thing goes for these financial institutions too. Once you invest in these technologies, these will minimize those capital expenditures and also boost operational efficiency.

It also enables you to make perfect utilization of those of various available assets within resources and also less time and also offers a better service.

6. Offer Tailor-made Products and Services

This is another reason why NBFCs need digitalization. It also brings the possibility of personalization for these financial institutions. Besides, it also gives them higher flexibility, which is indeed the most valued by those many customers. With this, customers can easily transact what they wish, and it also assists NBFCs in creating tailor-made solutions for those products and services.   

How Digitalization will help NBFCs in Future

Well, digitalization has enormous potential to take NBFCs to the next level. It also provides a wonderful opportunity for the optimization of various resources and also processes that can facilitate automated and intuitive decision-making in the future.

It enables NBFCs to get a complete advantage of those traditional banking systems and also can maximize the possibility of growth. The possibility of success depends on the way NBFCs use emerging technologies.

Collaboration with fintech is something that tends to be the future for a large number of NBFCs. It brings an enormous possibility for them to increase their revenue and also offer them highly advanced customer services.

Final Words

Digitalization in NBFCs is necessary for many reasons. It helps these financial institutions to maximize their reach more and more among needs and offer them the required services. This is the reason why most NBFCs of late rely on various cutting-edge technologies. 

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