Lending has been the most favoured among the four pillars of financial inclusion—payments, loans, savings and insurance—in India. While access to financing is perhaps a key issue, it is also a part of the problem. Our experience at Lok Capital shows that the need for financing often arises not due to paucity of income, but because of financial indiscipline and lack of foresight to save or plan for emergencies.

Though banks and financial institutions are employing digital strategies to enhance deposits, there is still an acute lack of awareness when it comes to savings and insurance planning. It is, however, heartening to see the emergence of innovative, tech-led solutions that are making the process of putting away money easier, more transparent and reliable. Instance-based underwriting and superior product engineering, which relies on data and behavioural science, are great examples. There also exists an opportunity of partnering with rather than competing with larger institutions to offer a suite of savings and insurance products. However, in such cases, creating a differentiated distribution strategy will be key.

On our part, we have taken yet another step in this direction. From backing small finance banks, which address the savings gap in lower income communities, we have made our first investment in a fintech platform, Affordplan, that is reinventing consumers’ savings behaviour when it comes to planning for future healthcare needs.

The IndiaStack, with its set of open APIs built around the biometric-enabled Aadhaar identification system, has laid the foundation for a new digital Indian ecosystem. Now, with start-ups paying more attention to consumer insights, a vibrant savings- and insurance-tech ecosystem can have a much larger impact, than lending ever would.

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