Microfinance Companies in India Are Doing More Than Just Lending Money

Microfinance companies and fintech platforms have the power to radically change the economic landscape of developing countries, but places like India, which contain large population segments that lack financial literacy, present a serious challenge to that potential.

Building Financial Literacy

Developing countries often have financially illiterate populations due to a lack of education on the matter. India in particular has a social system that often excludes large portions of the population from receiving financial services. Only a small minority, less than 35%, of the Indian population is actually financially literate.

A financially-illiterate consumer market presents microfinance companies with the problem of offering a service to people who do not really comprehend what they have available to them and how to use it. Those who lack financial education are unlikely to be responsible in paying back a loan that they have taken out. So what can companies do to increase demand for and awareness of their services?

Using Fintech Software and Apps to Teach Financial Literacy

Microfinance companies have been using fintech software to engage in a financial-literacy education campaign so that they remain solvent and can maintain the ability to sell their services to the Indian market. This use of technology has been made a bit easier thanks to India's well-developed mobile phone network infrastructure.

Fintech apps and software have helped Indian consumers learn about budgeting, financial planning, emergency savings, and other strategies to empower them economically. Users can retrieve information about their loan balances and conduct transactions through online payment channels, which not only improves their credit history, but also helps them avoid falling prey to those seeking to take advantage of their initial lack of knowledge.