By Gaurav Gupta, Co-founder & CEO, CarePay
The decentralised approach towards healthcare insurance in India is a key factor contributing to the remarkably low number of insurance penetration within the country. With such low penetration of healthcare insurance coverage, a large section of society ends up spending a significant portion of their savings on rising costs of healthcare services as they are either not insured or are significantly underinsured.
Despite notable progress in improving insurance penetration , around 400 million citizens still lack access to healthcare insurance. Further, the overall distribution of health insurance policies remains uneven and the public healthcare system continues to face issues due to inadequate funding. Amid the failure of public health insurance to meet the financial requirement of health services, private players have emerged as the better and more favoured option for seeking insurance coverage.
The rising costs of healthcare services and changing lifestyles make purchasing healthcare insurance a necessity, rather than a luxury. Against this backdrop, the emergence of vertical financing or the era of Fintech 2.0 is seen as a crucial solution. This development has the potential to revolutionise the healthcare segment, offering a comprehensive solution to enhance insurance penetration on a broader spectrum.
Industry-Specific Solutions
In the current decade, technology has become pivotal in most businesses including the healthcare insurance sector.
Technological advancements have given rise to Vertical Financing, a specialised form of financing that provides tailored financial products and services to meet the unique needs of the healthcare sector.. This contrasts with traditional healthcare financial services that follow a one size fits all model.
Integration with Core Business Processes
Vertical Financing in Fintech 2.0 transcends beyond the traditional boundaries of merely financing healthcare services. It plays a role in streamlining core business processes. Fintech 2.0 solutions can be integrated within the industry itself. For instance, in the healthcare sector, they can be applied to optimize inventory management for retail or expedite the billing process, to help doctors manage their clinics and hospitals better, proving to be highly effective.
Data-Driven Decision Making
Vertical financing leverages healthcare-specific data to make better lending decisions, manage risk, and offer customized lending products. Lending comes with an inherent risk of defaults and frauds. Vertical Financing solutions can help lenders mitigate such risk, by enabling credit underwriting to make use of healthcare-relevant data and AI models which will help not only in reducing the cost of capital but will also help in making informed decisions by providing an in-depth understanding of the potential risks.
Technological Innovations
The amalgamation of AI, blockchain and advanced analytics in Fintech 2.0 has opened the gateway to a dynamic financing approach that focuses on both the customer experience and streamlined operations. By using digital interfaces and customised lending options, Vertical Financing offers an inclusive chance to all citizens to avail of healthcare insurance based on their financial requirements and situation, allowing for an enhanced and intuitive customer experience. By leveraging technology, these solutions instantly approve and disburse funds, permitting access to funds immediately during the unprecedented situation of emergency healthcare expenses.
Ecosystem Development
Fintech 2.0 is a revolutionary concept as it provides uniquely personalised specific solutions to each niche approach and transforms the way healthcare insurance works. Traditional healthcare insurance operated on a more conservative approach with multiple visits to a multitude of departments. On the contrary, Vertical Financing brings the hospital, lenders and patients all under the one-unified pool, facilitating the end-to-end healthcare journey of the patient, and allowing for more seamless transactions and collaborations.
Fintech 2.0 -The New Healthcare Insurance Haven
The dream of Healthcare Insurance for All’ will soon turn into reality with the acceleration of Fintech 2.0. While Vertical Financing in Fintech 2.0 comes with its unique set of challenges from the need for in-depth industry knowledge to effective management of insurance-related risks, it undoubtedly paves the way for a brighter future of healthcare insurance. In essence, Fintech 2.0 and vertical financing represent a more sophisticated, integrated, and customer-centric approach to financial services, designed to meet the nuanced needs of different industries.