Fintech Analysis: How Fintech start-ups are helping banks in reducing the NPAs?

By
Aamir Kapoor
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NPA’s have been a problem for the banking and finance industry since time immemorial. Banks and financial institutions will go to any length in order to reduce these non-performing assets. Moreover, in the recent times as the leverage of the companies increased, NPAs have become a problem for most of the banks. In developing economies like India, as the economy grows, the NPAs are growing as well. That is why banks are trying to find innovative ways in order to reduce the non-performing assets.

In this quest, many of the Fintech companies are actually helping the banks to deal with the non-performing assets.

Most of the Fintech start-ups are using data analysis in order to help the banks decide whether you should give the loans to small and medium enterprises or not. With the help of big data analysis, it is becoming easier for the banks to decide whether they will be able to handle the risk of having a loan to a particular organization or not. That is why banks find it much easier to take the decision of funding out the loans.

  • Predictive models:

With the help of predictive models as well, the Fintech start-ups are helping the banks to decide whether they should disperse the loan or not. As a result, it is easier for the banks to reduce the risk. With the help of these predictive models, banks will be able to take a better decision of filtering out the borrowers which are likely to turn out non-performing assets. As a result, they are able to save a lot of time as well as money by dealing with only the most productive borrowers.

  • Proper connectivity with the borrowers:

With the help of innovative solutions, proper connectivity is being provided. When proper connectivity with the borrower is being provided, the facts can be verified as well. As a result, the banks will be able to take a more informed decision. This ensures that the shady borrowers are filtered out. This is reducing the non-performing assets of the banks.

In these ways, the Fintech start-ups are actually helping the banks in order to not only tackle the non-performing assets but also to reduce the non-performing assets so that they are having a better and healthier balance sheet which they can handle in the longer term. This is also significantly reducing the instances of defaults.

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