By Arun Poojari, CEO & Co-Founder, Cashinvoice
Imagine – creating personalized loan offers or building automated payment apps that tap into real client data—with their consent, leading to impressive impact : This is now true for businesses as personalized financial services don’t just meet basic needs; they elevate the entire experience. Tailored solutions and advice help businesses optimize budgets, access relevant investment and loan options, and boost savings, fostering both satisfaction and loyalty.
In India, fintech has a big hand in reshaping this financial ecosystem by offering more accessible and efficient products, such as customized lending options, personalized investment plans, and automated financial management tools. Notably, the country is projected to host around 150 fintech unicorns, collectively valued at $500 billion by 2030. With sectors like payments, insurance, lending, and wealth tech driving this growth, the opportunities for personalization and customer-centric solutions are set to multiply exponentially.
One common aspect that enhances personalization in all these sectors is the power of data analytics. Big Data and advanced analytics offer immense potential to deeply understand customer needs and open doors for more inclusive financial services. Take MSMEs, for instance—a sector historically underserved by traditional financial institutions. Of the 630 lakh MSMEs in India, only 250 lakh have access to formal credit.
However, by leveraging Big Data and alternative data, fintechs can underwrite credit and develop credit scores for businesses with limited history, significantly improving financial access. With their disruptive technology, fintech offers customized solutions like alternative data-based lending, digital payments, and insurance, bridging gaps and empowering underserved groups. Fintech is not only transforming how personalized financial services are delivered, but it’s also transforming risk assessment. Unlike traditional banks or NBFCs, fintech has the advantage of partnering with multiple lenders, allowing them to offer a wider variety of credit products.
This flexibility helps address the varying risk tolerances of individual lenders. For example, while one lender may have strict risk criteria, fintechs can provide alternatives that match the business risk profile with their extensive network of lending partners. This approach leads to more accurate recommendations and a higher loan acceptance rate. As a result, the lending sector is set for significant growth, with the book size expected to expand 6.6 times, reaching US$ 300 billion in the next five to six years.
Investment potential and the SCF shift
In India, 87% of people currently use fintech services, surpassing the global average of 67%. This high adoption rate highlights the growing role of financial technologies in the business space, such as digital payments, investment platforms, and supply chain financing (SCF) solutions. When it comes to personalization, fintech takes it a step further by utilizing AI to dive into a person’s financial behaviors, spending patterns, preferences, and long-term goals. For example, these platforms track how businesses manage their spending, savings, and cash flow over time. They use this data to find investment alternatives that align with their risk tolerance and financial objectives. Additionally, by providing real-time insights, these platforms can highlight market trends and notify clients of potential investment opportunities that match their evolving needs.
Simultaneously, the rise of fintech has significantly transformed the SCF market, shifting from a traditional model to one that incorporates multiple relationships within a network. It offers small businesses a comprehensive portfolio of transactional and business services from supply chain partners, third-party providers, and financial institutions using cloud-based solutions and managed services. Moreover, financial institutions are increasingly partnering with fintech firms, B2B, and P2P platforms to support MSMEs in their quest for assistance. This shift from the traditional, financial institution-centric SCF model—where banks were both the originators and funders—means that specialized participants can now offer a wider range of personalized solutions, such as dynamic discounting and invoicing financing.
To sum up, India’s fintech market is projected to reach $420 billion by 2029, and its personalization services are set to redefine how businesses manage their financial needs. Beyond enhancing credit access, these customized offerings empower businesses with financial tools designed specifically for their unique circumstances. As the fintech landscape grows, the capacity to provide thoughtful, data-driven experiences will be the key to shaping the future of finance and distinguishing leaders in this competitive space.