NBFCs must adopt new tech to attract PE funding: Study

Non-Banking Financial Companies (NBFCs) will have to keep pace with new technologies and changing customer aspirations to attract timely private equity (PE) investments, a study said. 

Investing in analytics & artificial intelligence (AI) will help NBFCs meet credit demand of new-age customers, the study said. 

 “NBFCs must challenge the status quo in their business and find funds to invest into operating models with the potential to disrupt the industry,” said the study titled, ‘Fuelling NBFCs through private capital,’ jointly conducted by ASSOCHAM and advisory firm PwC.
 
It added that in the wake of advanced digital policy initiatives such as India Stack, Aadhaar Pay and Direct Benefit Transfer (DBT) and exponential increase in smartphone/internet access, NBFCs need to tweak their business models to grow in a hybrid world (digital and physical).
 
The joint report also said that in order to ride the wave of increasing formal credit penetration in a growing economy, NBFCs will need to invest in new technologies to lower the cost of acquiring new segments (including thin files), servicing existing customers and de-risking the portfolio.
 
Besides, in order to fulfil demands of the new-age customer in terms of credit facilities, NBFCs will have to invest in analytics and AI (artificial intelligence) capabilities to be able to connect to the customer in a hyper-personalised manner.
 
“New tech-based business models have the potential to crunch the learning period substantially and re-balance the strategic advantage of information access by inserting themselves into the value chain with technology,” said the study.