PremiumWith more keypad-literate Indians than literate Indians now, wide availability of mobile services along the length and breadth of the country and lower priced internet access, digital finance has never looked better before. The pioneering efforts by India with its JAM trinity to bring banking access with secured identity and digital to every citizen is a global first. The initiatives such as ‘Digital India’, ‘Make in India’, ‘Startup India’ have inspired many youngsters to develop innovative ideas to solve consumer issues.
The basics of financial inclusion is to make sure that the consumers have access and choice of products that suit their need. The brick and mortar distribution of conventional finance has not reached the nook and corner of the country. Digital channels have started making access to finance, especially credit, as easy as searching for something on google - language no bar.
Financial inclusion is a journey
Financial inclusion has been the focus of our policies towards building a robust & inclusive economy. It would bring economic development and offer respectable livelihood to our citizens. This basic right to dignity needs to be improved by bringing sustainable distribution of finance.
FinTech players have been focused in bringing differentiated finance products to the markets. They have been working with the financial services brands for past few years and the experience has paved way for newer segment of consumers to benefit from access to finance. Affinity groups that were unserved before, like low- income, semi-urban and rural customers in unorganised sectors, have benefited due to availability of finance from FinTech platforms. Some of the platforms also cater to MSME & SME sector.
As more newer consumers come to formal credit system, larger is the responsibility for the industry to self-regulate with a strong code of conduct. RBI’s fair practice code of conduct for lenders is a benchmark to emulate and further build on.
A strong Code of Conduct should use the principles of transparency, uncompromisingly ethics, best-in-class services and robust grievance redressal mechanism. The industry has to adopt alternative dispute resolution mechanisms to further customer interests, to save time and costs. As we encourage our consumers to go digital, we need to strengthen their belief in grievance redressal. The surest form of consumer confidence is when they come forward with complaints, with the assurance that it would be redressed within a certain time period.
In the lending business, communicating all the relevant product information as part of consumer engagement before they make a product choice is critical. Disclosure of all costs and conditions involved is an absolute necessity. Ethical collection practices is another must. Only when these are done in the right spirit across the industry, will it bring a sense of trust and consumer confidence.
Investments in safety
Data protection, responsible fiscal behaviour by lenders and transparency of information are uncompromising aspects sought from the industry. Responsible lenders invest heavily & regularly in technologies to offer data security, consumer confidentiality and privacy management.
Data encryption : All the locations where data resides like databases and file systems are encrypted. Data is encrypted at source before transfer and only authenticated receivers can decrypt and access. Data is masked at the display like bank details. This avoids potential leak of such sensitive private information .
User Access Control : Only authorised people can see relevant data. Role based data segregation is implemented. Data Integrity and confidentiality is maintained by the system to capture only what is required.
Dealing with maliciousness
Most of the digital lenders (like other Fintech platforms) who have been funded by PE/VC investors or family offices of repute, are registered & regulated companies with their high standard of corporate & digital governance.
As any other industry, fintech sector of late is seeing mischief-mongers, pretending to be fintech platforms. We need to deal with these miscreants quickly and strictly. No one should be allowed to play with consumers - be it their finance or lack of finance.
The lending industry, along with the licensed digital platforms need to work with our regulators, police, consumer courts, app hosting services to ensure that consumers are not victimised by the nefarious players. At the same time, such sporadic incidents should not be an excuse for slowing down the growth of digital access to finance.
After all, true financial inclusion is when consumers have choice of products and the free-will to choose from the product-suite or even to decline any selection. In the fourth Industrial Revolution era that we are in, digital is the only way to democratise product availability & consumer rights.
(The author is an independent markets commentator. Views are personal and do not reflect Mint's.)
