It is an undisputed fact that access to financial products and services can upgrade the lives of citizens, especially at the last mile. When people are able to borrow capital, get insured, or save money in formal financial institutions, they are able to live better lives. Yet the fact also remains that a major part of Bharat is still underserved and underinsured. For India to achieve sustainable growth, greater financial inclusion is crucial. Towards this purpose, the fintech companies have largely been instrumental in providing greater access to financial products like credit, savings, investment, micro-insurance.
Fintechs are rapidly becoming the face of financial empowerment globally, particularly in economically diverse and emerging countries like ours. These new-age companies are experimenting and innovating on all fronts. The technological innovations aimed at breaking the barriers of the urban-rural divide are able to bring more tech-shy people within the realm of financial and digital inclusion. From tapping the retail network stretched across the country to implementing a ‘sachet’ or ‘bite-sized’ approach to target the un/underserved segments of the economy, they are pushing India towards true financial empowerment.
Sachet approach: Hand-crafting customized financial services
The 1970s’ shampoo sachet revolution paved the way for sachetized services in India. Driving on customization and cost economics, fintechs have re-imagined their product offerings to address specific financial needs. By incorporating the key attributes of small ticket size, short tenure and contextual need-based offerings, sachetisation is leading the way to an omnipresent financial services distribution model.
In India, the majority of the unbanked and underserved masses find it hard to transact with banks because they lack the financial know-how and are mostly tech-shy. So, when it comes to designing financial products for the last mile, it is crucial that they are easy-to-access and easy-to-consume. This is where sachetisation shines. It simplifies products and brings them within the reach of the general masses.
For instance, insurance at INR 10 a month, in small sachets, catering to specific risk coverage is the first step to introduce the largely uninsured India’s last mile to the benefits of insurance. It will reduce the cost and make it accessible and affordable to the masses while protecting them from future uncertainties. Interestingly, the sachet model has immense potential to influence consumption habits that can drive radical changes in the way insurance is perceived and consumed. Thus, this micro-sized or bite-sized consumption behavior can bring about a systemic change in the mindset towards other financial products like investments and even lending.
DaaS leveraging financial services in a ‘sachetised’ form
In the entire sachetisation journey, the Distribution-as-a-Service (DaaS) model has a crucial role to play. It is a framework that ensures local retailers today can make a host of financial and non-financial services readily available to the masses in an assisted mode through their stores. The services range from banking to e-commerce, OTT to online education, and travel to easy lending solutions, that were earlier unavailable in rural areas. DaaS is a mission to simplify high-end technology for consumption at the last mile, thereby democratizing services and making the benefits of the modern world accessible to all. By utilizing the power of technology, it digitises, sachetises, and universalises products and services for last-mile distribution. It enables secure consumption for communities not part of the financial or digital mainstream. Now people can simply visit a local kirana shop and buy micro-insurance along with 1 kg potatoes or 1 kg pulses.
The secret lies in local trust. Given that they have been purchasing household items from them for years, customers have faith in the owners of the nearby local kirana shops. The streamlined technology that serves as the backbone of the DaaS platform enables fast, dependable, and scalable solutions for service providers on one end and easy and steady consumption at local retailers on the other. It also enables a speedy, error-free, and trustworthy go-to-market, which is one of the main success metrics for any distribution-led strategy. Every citizen can access high-end technology thanks to a micro-simplified, sachetized delivery system.
Fintechs: Leading the inclusion brigade
New-age fintechs are paving the road for financial service sachetisation. From offering micro-insurance to micro-credit products, fintechs are addressing the unmet needs of customers, small-scale retailers across the country. However, the implementation of a sachet service framework to serve the population across the country would require an architecture that is modular, scalable, API-driven and cloud-based. With multiple fintech players striving to provide financial and banking solutions, the sachet model aims to empower microentrepreneurs and consumers alike, creating a win-win situation for all.
Sachetized products that can be accessed anytime, in any quantity, according to specific requirements will stimulate aggregate demand, and therefore economic growth. One of the key goals of sachet services is to transform luxury into affordability. Products like insurance which were earlier too distant for the masses are made available in small values. Sachetisation, together with enhanced last-mile connectivity and distribution, has the potential to truly transform the way people consume financial services in the country and pave the path to a financially empowered India.
Views expressed above are the author’s own.
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