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Technological trends: A catalyst to the educational lending sector in 2023

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Technology has introduced sweeping changes to business operations in various sectors, including education. With technology, the education space has geared up to offer hyper-personalised education financing solutions seamlessly. Many students are enthusiastically chasing their academic aspirations independently by opting for student loans. As per research reports, the education market in India is expected to touch USD 225 billion mark by FY25. Hence, providing the right education financing solutions and related services at lightning-fast speed is crucial, now more than ever.

Technology has enabled lenders to provide efficient and customised solutions to their customers. Digitalisation has resulted in a shift from traditional brick-and-mortar lending methods to time and cost-effective automated processes. New-age financing players utilise technology to offer next-generation financing solutions, better customer experience (CX), innovative business models, cost optimisation, and, thus, enhance operational efficiency. To connect with primary, secondary, and tertiary audiences, they further leverage omnichannel presence across offline and online platforms, thereby allowing them better visibility at a granular level.

Some technological trends that will shape the education lending business

Identifying the right audience and analysis of their profile: Financial institutions are able to identify and tap prospective customers basis technology-backed analysis of the student profile. Further, AI-ML technology is being deployed by lenders to determine students’ employability potential to onboard the right credit. This predictive analysis helps them understand the customers’ buying patterns, social behaviour, financial profiles, and historical data. Moreover, advanced analytics is used to gain insights using the data, identify the right audience and make data-backed decisions.

Hyper-personalised solutions to meet unique financial requirements: Financial institutions are keen to provide tailored solutions throughout the customer journey. They are able to execute the same through cloud-based technology. Many companies have deployed digital tools such as natural language processing (NLP), Data Analytics, and Big Data to deliver value propositions. NLP-based automated chatbots are utilised to interact with customers at any point of the day. On the other hand, Big Data brings 360-degree insights to understand customer preferences to provide enhanced CX.

Onboarding: Advanced technology has led to providing contactless, paperless digital solutions by enabling automated onboarding procedures. The video customer identification processes (V-CIP) have massively reduced overall customer onboarding time. Customers can complete this procedure from the comfort of their homes. Many financial institutions depend on advanced analytics to reduce the risk factor and identify new growth opportunities.

Robust security: Blockchain technology is crucial to provide robust security as it authenticates end consumers’ transactions and also prevents unauthorised access. It also ensures transparency in the process leading to strong security of sensitive data. AI and ML-based voice recognition, facial recognition, and biometrics can detect data breaches. Moreover, KYC eliminates identity theft, and firewall systems secure the customer’s sensitive data.

Effective operations and customer data management:  Technology has made operations effective and less time-consuming. Organisations can now easily store and access large volumes of data, thanks to cloud technology. Furthermore, Robotic Process Automation (RPA) primarily focuses on achieving tasks such as generating reports, eliminating redundant processes, and more. Additionally, automation prevents human error and operational silos, saving precious time.

Easy repayments: Technology helps customers to get timely reminders for their payments due to automated services. Further, they can choose from multiple payment gateways available for easy repayment.

Collections and risk management: Risk management is a much-needed core competency that helps organisations deliver and increase stakeholder value over time. Big Data and Data Analytics draw meaningful inferences from humongous data, which helps in accurate decision-making to mitigate risk. It can also highlight fraudulent activities to understand customer behaviour before sanctioning credit. Additionally, machine learning algorithms help identify red flags and provide early warnings about customers who may default. With the help of these tools, the financier educates such customers and can ensure timely collections.

The lending sector has undergone a significant transformation by embracing technology early on. The financial players will keep innovating the business processes to deliver blazing-fast hyper-personalised education financing solutions and exceptional customer experience. The financial sector will continue to adapt to emerging technological trends in 2023 and beyond to empower its customers.


(The author is  Mr. Samir Mohanty, Chief Transformation Officer, Avanse Financial Services, and the views expressed in this article are his own)


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