| |APRIL 202219circumstances, and demographic and sociological variances. These technologies provide MFIs with a significant chance to improve client experience, raise underwriting robustness, analyze market potential for global development, and manage risks proactively.Account Aggregators ModelThe microfinance industry will be able to analyze consumers across many data points, including non-financial data, on a single platform, thanks to integration and access to account aggregator systems. It is vital for the AA ecosystem to grow and more actors from other industries to embrace this architecture so that data that is presently stored in silos can be accessed through a single platform. The key benefit of connecting with such a platform is that it is sector neutral and enables access to a variety of data points, including health, skills, and education records, in addition to financial data. Such access will also spur the development of tools that take a comprehensive approach to analyzing client risks.Implementation of Bharat Bill Pay system (BBPS)BBPS is an integrated bill payment system that provides clients with a convenient and interoperable bill payment service via a network of agents that accept cash or electronic payments while allowing the utility to collect payment all at once. BBPS is currently a utility payment platform. It can, however, be extended to financial institutions who use the platform to accept consumer repayments. MFIs can also encourage their microbusiness customers to use BBPS to manage their cash flow. This will assist MFIs to increase their cashless collections by reducing cash-based transactions by these consumers.Co-originating LoansAs both types of financial institutions have separate underwriting requirements, systems, and procedures, the co-origination market is mainly underutilized by MFIs owing to a lack of requisite technical infrastructure to efficiently interact with banks. Last-mile financial inclusion, on the other hand, will be enabled through collaboration with fintech businesses to build products, processes, and technological infrastructure that are compatible with the ethos of both banks and MFIs.The Future PathMFIs have been able to increase their percentage of digital disbursements as the number of bank account holders has increased, but the collection method is still predominantly cash-based. Customers get their loans straight into their bank accounts, but they are often withdrawn from the bank accounts and spent in cash because their ecology is still based on cash.In January 2021, it was reported that currency notes in circulation were Rs. 27.1 lakh crore, up by 22 percent from the previous year. If banks servicing rural consumers can push the use of financial technology and digital payment channels, it would encourage people to keep cash in bank accounts and spend/transact digitally, converting the ecosystem into a more digitized one.
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