ⓘ Featured image: PayNearby founders, from left: Anand Kumar Bajaj, Yashwant Lodha, Subhash Kumar, Rajesh Jha
In its bid to offer financial liberation to the masses, PayNearby, India’s largest hyperlocal fintech startup, this Independence Day, has launched a module to bring the best of banking offerings – Nivesh (Savings), Udhaar (Lending), Suraksha (Insurance) and Payments at a store nearby. The platform is tailored to offer customised products, relevant to all income cohorts ushering in true financial inclusion. Through its latest congregated platform, PayNearby aims to provide best of technology advancements, India Stack and leading banking and processing partnerships at the last mile.
Even as the government’s Pradhan Mantri Jan Dhan Yojana (PMJDY) initiative ensured that about 80% of the Indian population has a bank account, over 48% of them remain inactive with no transactions in the last one year. Additionally, according to the Indian Monetary Fund, only 13% of Indians make use of formal channels to borrow money. The rest rely on alternative methods like their local moneylenders, who often charge exorbitant interest rates, pushing them into an inevitable poverty cycle. Furthermore, India’s insurance penetration is just over 3%, due to high premiums and erratic earnings – leaving them bereft of an insurance cover. According to the India Savings Report, an independent study conducted by PayNearby this year, 60% of the low income cohort do not have access to a formal savings product, and continue to save either with a chit fund, or informal mechanisms like under the mattress.
Financial inclusion in a diverse country like India requires customised treatment encapsulating the different dimensions of the populations while offering a gamut of services. Lack of financial literacy plays a huge part in why documentation intimidates the population, while a scarcity of traditional financial institutions also requires them to travel long distances, often sacrificing day wages. Thus, the segment is forced to rely on age-old informal mechanisms, which are often insufficient, unreliable and expensive. When coupled with information asymmetries and high transaction costs, the poor who lack collateral or credit histories are stuck in a bad equilibrium with no escape.
In the post COVID world, the realisation that efforts need to be made to bolster our health and economic infrastructure became more evident. For citizens to have a safety net, when met with life’s unexpected events, it is important that people across all income cohorts have the awareness and infrastructure to save for the rainy day, protect themselves with the right insurance products and raise funds easily when necessary.
PayNearby’s latest offering of a combined module, Nivesh (Savings), Udhaar (Lending), Suraksha (Insurance) and Payments, meets these needs through a single platform that simplifies high-end technology and brings it to the hinterlands of the country. The Insurance module aims to bolster insurance penetration in India by providing customised, tailor-made plan through their vast retail network, since these retailers enjoy certain trust and affinity for their surrounding communities. The retailers, who have never sold insurance before, will be trained and educated to distribute it to a target group who has never brought it before, promoting dual empowerment. This will help improve accessibility to insurance plans, and thus mitigate vulnerabilities among the lower-income brackets.
Similarly, the Savings module aims to inculcate a savings habit amongst the cohort, who avoid formal channels due to the lack of tenure flexibility, accessibility to financial systems and tech intimidation. PayNearby aims to prepare the segment to create a safety net for unforeseen circumstances and save to fulfil their life goals, by simplifying savings products and improving accessibility.
The Lending module will leverage big data analytics, artificial intelligence and predictive tools to help score millions of unbanked Indians who otherwise have been left out of the financial ecosystem. With the right partnerships and big data available at PayNearby (through processing of millions of transactions everyday), and the strength of on ground distribution network, PayNearby aims to provide Bharat with the right lending solutions to meet their growth and sustenance needs.
The Payments module aims to build upon the contactless transactions drive, triggered by the pandemic. Despite the fact that manual cash management is unsafe, inefficient and time-consuming for both entities involved, 78 percent of the population is still dependent on cash. Through the company’s assisted hyperlocal model and Digital Pradhans, they hope to make the latest advancements of digital payment technology available to the masses, in a format that is easily consumable by them.
Anand Kumar Bajaj, CEO & MD, PayNearby, talked about PayNearby’s goals as,
“We are a developing economy, but when we are strategically aiming to move towards a $5 trillion-dollar economy, basic financial services such as – insurance, savings, lending and digital payments need to be treated as important as food, clothing and shelter. This Independence Day, we aim to offer financial liberation to the masses in our country in the truest sense. Reviving the economy requires kick-starting consumption which is in turn dependent on lending and savings. But most importantly taking these ‘financial essentials’ to the masses including the bottom of the pyramid is what will drive the economy. Therefore, incorporating the unbanked and underbanked into the digital fold is imperative to bring about a tangible economic impact.”
“With our latest congregated platform, we aim to make ‘financial essentials’ ubiquitous, whilst incentivising the masses with the right means, helping them embrace financial inclusion. Riding on the trust that kirana are synonymous with, we are confident that we can revolutionise branchless banking and cultivate last-mile financial empowerment”,