Home FinTech Digital lending on cusp of transformative trends

Digital lending on cusp of transformative trends

While the digital lending sector in India offers vast opportunities due to technological advancements and an expanding customer base, it also faces significant challenges in terms of regulatory compliance, risk management and data security, tells Krishna Somayaji, Founder, Chairman, and Managing Director (MD), SOMAYAJI FinTECH, to Akanki Sharma, in an exclusive interaction

by Akanki Sharma
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What’s the story behind founding SOMAYAJI FinTECH? What inspired you to start this venture?

In 2021, SOMAYAJI Group broadened its horizons with SOMAYAJI FinTECH, a bold stride into advanced financial technologies, especially in lending. Distinct from our consulting and technology services wings, SOMAYAJI ThoughtWORKS and SOMAYAJI TechSERV, this new venture is our answer to the evolving demands of the fintech world. It’s where two decades of Banking and Financial Services (BFS) expertise meets innovation, marking our commitment to revolutionise finance with cutting-edge technology. SOMAYAJI FinTECH isn’t just another branch, it’s our vision for the future of fintech.

What challenges did you face in building and growing this company, and how did you overcome those?

A decade ago, SOMAYAJI Group made a strategic choice to concentrate on system integration, partnering with product firms instead of navigating the complex waters of product development. This path was initially mirrored by the company upon its inception in 2021. However, facing challenges in large system integration projects, including delays, slim profit margins and
reliance on product companies, we pivoted to create our own products.

Our product development soared from a single offering to 12 remarkable products in just six to eight months. These innovations not only captured the market’s attention, but also shone at the Singapore Fintech Festival in November 2023, drawing potential customers.

This shift from system integration to in-house product development marks a new era for our company, setting us on a trajectory towards greater success and industry leadership. How do you ensure your company remains innovative and adaptable in a constantly evolving business environment?

At SOMAYAJI, we’ve turned our extensive experience in managing complex projects and system integrations into a competitive edge, crafting innovative technologies and solutions that stand out in the market. Our prowess in recognising and filling industry gaps has led to the creation of cutting-edge products that eclipse those of our competitors, both big and small.

This inventive flair is showcased in our OrangeSUITE, a collection of 12 unique products. Designed for versatility, these products work both as an integrated suite and as individual solutions, easily fitting into various applications or pairing with third-party apps. This strategy highlights our commitment to constant innovation and adaptability, keeping us at the forefront of the ever-changing business world.

Your views on digital lending scenario in India–the current trends, opportunities and challenges in the industry?

Fintech is unique, as it operates in two spheres. Companies like ours provide technology services to the financial sector, while others offer financial services directly to the public. Often, fintech is mistaken for just lending, but our focus is on technology solutions for banks. Th sector is revolutionising the traditional banking landscape, with fintech firms emerging as strong competitors, challenging conventional financial institutions.

Digital lending realm is in the midst of a thrilling technology upheaval. Artificial Intelligence (AI) and Machine Learning (ML) are taking centre stage, revolutionising credit assessments with speed and efficiency, and casting a wider net to identify eligible borrowers from all walks of life. This tech transformation is further amplified by AI-driven underwriting through
Application Programme Interfaces (APIs), bringing a new level of precision and inclusivity to loan decisions. The widespread use of smartphones and the internet is catapulting digital lending platforms into new territories, especially remote areas fuelling a rise in mobile-based lending. The sector is also evolving with bespoke financial products, from convenient smallticket personal loans to tailored financing solutions for Micro, Small and Medium Enterprises (MSMEs), addressing a spectrum of financial needs.

Talking about the opportunities, in the vibrant tapestry of India’s digital lending landscape, a world of possibilities unfolds, particularly for the vast unbanked or under-banked populace. Here lies an untapped goldmine, as digital lending platforms extend financial service once beyond the reach of traditional banking. A hot bed for innovation, the sector is unveiling flexible, instant credit solutions tailored for a diverse clientele. The magic wand in this revolution? — AI-based underwriting via APIs, a game-change making loan decisions not just more precise, but also broadly inclusive. Moreover, a fascinating dance is underway between fintech firms and traditional banks, a strategic pas de deux that marries fintech’ nimble innovation with the sturdy trust and regulatory compliance of established financial giants.

However, navigating India’s digital lending landscape involves a complex ballet with the Reserve Bank of India’s (RBI) ever-shifting regulatory rules, aimed at safeguarding consumer interests and ensuring financial equilibrium. As this sector
ventures into uncharted borrower territories, it grapples with the heightened risk of Non-Performing Assets (NPAs). In this digital era, there’s also a pressing need for iron-clad security protocols to protect customer data and maintain privacy, a critical aspect as reliance on digital platforms escalates.

In conclusion, while the digital lending sector in India offers vas opportunities due to technological advancements and an expanding customer base, it also faces significant challenges in terms of regulatory compliance, risk management and data security. Navigating these effectively will be the key to the industry’s sustained growth and success.

Are there specific technological advancements that you believe will significantly impact the digital lending industry in the near future?

As we navigate the swiftly changing seas of the global digital lending world, a constellation of ground-breaking technologies is rising: AI and ML, blockchain, advanced analytics, open banking APIs and regulatory technology.
Peering into the future, we’re on the cusp of transformative trends:

  • Universal credits scores: Imagine a world where cross-border data crafts global credit profiles, unlocking credit access that leaps over international borders.
  • Decentralised Finance Integration (DeFi’s) rise: Picture a shift from traditional banking to blockchain realms, making lending borderles and more accessible.
  • Quantum leaps in computing: Envision quantum computing changing the game, where complex loan decisions are made in the blink of an eye.
  • Augmented Reality (AR’s) new frontier: AR is reimagining customer interaction, from virtual loan consultations
    to immersive financial planning journeys.
  • Regulatory unity: A global dance towards unified regulations promises to simplify compliance in digital lending, knitting together a more integrated financial world.

What are your expansion plans for SOMAYAJI FinTECH for the next five years?

In the coming five years, our organisation is set to embark on an exhilarating journey of growth an transformation. At the heart of this adventure are two thrilling objectives: the relentless pursuit of innovation in product development, and a daring geographic expansion that takes us far beyond Indian shores.

Imagine a future where our product range is not just expanded, but also refined to meet global standards, infused with the latest technologies. Picture our first international outpost in Singapore, a strategic gateway opening up pathways to the Asia-Pacific, European an eventually, the United States (US) markets. In addition, there is more. We are turning key team members
into stakeholders, in a move that’s both – a tribute to their steadfast contributions and a strategic alignment of their aspirations with our long-term dreams. This is not just growth, it’s transformation with heart and vision. It’s our blueprint for soaring to new heights and igniting a fire of sustained innovation.

Is there anything you wish you ha known when you started your entrepreneurial journey?

Looking back, our journey at the company reveals a learning curve steeped in strategic nuances. Initially, we zeroed in on system integration and backing third-party products, a cautious play safe from the perceived risks of product development. Yet, hindsight now paints this choice as somewhat conservative.

Our early strategy was shaped by the belief that product development was a high-stakes game, leading us to lean on third-party vendors. However, time unveiled a twist in the tale: this reliance bore its own risks and constraints, overshadowing the untapped potential of crafting our own products.

This epiphany stands as a crucial turning point. With our robust skills in system integration, business development and tech solutions, venturing into product development from the start could have skyrocketed our company to new heights. It’s a reflective moment, acknowledging that while our initial decision was measured, it may not have been the most forward-thinking for our long-term ascent.

What is your success mantra?

In the tapestry of our organisation’s story, resilience and adaptability have been the golden threads. For a decade, we’ve ridden the waves of fluctuating markets with an unwavering spirit of progress and perseverance. Our path, while strewn
with challenges, has been lit by relentless drive for improvement.

Our strategy is akin to a dance wit dynamism – constantly tuning into the rhythm of the market, assessing our strengths an weaknesses, and adapting our steps to remain in the lead. This dedication to evolve with time has been our beacon, guiding us to the creation of exceptional products.

Though we may have joined the product development arena a tad later than others, the acclaim our products have received speaks volumes. They are the fruits of our rich experience and sharp insight into market needs.

Our success recipe? – a blend of steadfast market presence, continuous self-refinement and a strategic march towards our aspirations. This blend has not just carried us through various seasons, but has also set the stage for our future triumphs.


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