India’s Leading BFSI and FinTech Companies 2023

42 | India’s Leading BFSI and FinTech Companies 2023 [ INDIAN NBFCs SECTOR OVERVIEW ] KEY TRENDS Digital adoption: NBFCs reliance on digital is increasing rapidly. Leading companies are focusing on deployment of digital tools, apps, customer service bots to provide convenience, ease and maintain strong risk management practices. F l ex i b l e and pe r sona l i zed products: NBFCs are focusing on innovatively designed flexible products, opting for tech-based, customer-friendly and yet personal solutions to their clients, going in for inclusive strategy, bringing onboard urban customers in unorganised sectors Pa r t ner sh i p wi t h F i n t echs : New-age NBFCs are leveraging partnership networks across the value chain for lead-generation, client on-boarding, underwriting, credit/loan disbursement and collection. KEY CHALLENGES Underserved segment of the market: Although, NBFCs are crucial credit dispenser and have strong last mi le connectivity. However, to serve the underserved and meet their unmet demands is challenging. Also, critical challenge is to earn sufficient profitability from underserved segments of the market. Refinancing Option: Banks and HFCs have various re-financing options. On the other hand, NBFCs depend entirely on capital market or banks for obtaining credit. This acts as a key roadblock for credit growth. Also, compliance costs for NBFCs are becoming tighter and general business environment becoming fiercely competitive. Global headwinds: In an uncertain environment, the dynamics of the customers’ priori t ies and their earning abilities change constantly. It is imperative that the NBFCs adopt a dynamic model that helps to quickly reconfigure their offerings in line with the evolving scenario. OUTLOOK NBFCs have survived thepandemic and managed to reasonably weather the cr isis. Suf f icient prov i s i on i ng , enough f und cushion and economic recovery are encouraging factors. But sector can’t afford to drop their guards. Following is the key outlook for the sector. Asset growth: Expected to grow at four-year high levels in FY23 Stepped up competition from banks in rising interest rates will limit competitiveness of NBFCs in certain segments like vehicle and gold loan segments Digi t i sat ion of the lending ecosystem: Companies need to adopt alternative credit scoring based on non-financial data Dun & Bradstreet