As the coronavirus pandemic unleashes a devastating impact on businesses, institutions and society, Spocto, one of India’s leading big data analytics-based banking and financial services company, has initiated a comprehensive well detailed study entitled ‘The Ground Truth – Voice of Indian borrowers’. It consists of views and insights from 1,800 account holders across cities pan India such as Mumbai, Pune, New Delhi, Bangalore, Kolkata, Ahmedabad etc., wherein the study presents actual and actionable insights from the consumers on moratorium.
The pandemic left countless working professionals bereft of employment opportunities, and factors like layoffs, salary cuts and reduced earnings have resulted in a mass exodus of both skilled and unskilled workers from the big cities to their hometowns. In this light, the data received from these retail loan account holders brings in insights pertinent to the ground reality, the support they need, their current awareness and understanding of Moratorium & its impact on their payment amount.
The study primarily revealed the following key findings;
● 59% of consumers witnessed complete loss of income due to COVID-19
● 34% employees from present workforce pool have lost their jobs
● As a result of the fiscal depravity, a staggering 78% of the MSMEs were forced to shut down operations due to zero revenue generation.
● 76% of the overall account holders have taken small-ticket loans amounting to Rs 50,000 in EMIs while it is mostly the unsecured loans that have contributed to the plunge in repayments than secured loans
● 78% of the consumers opted in for the initial Moratorium period (March to May), which implies that 22% either willingly chose to opt out or did not OPT IN from their bank’s Moratorium offer.
● 75% of the borrowers highlighted the need for more clarity and education surrounding moratorium. In a similar vein, 64% of the borrowers affirmed that they are aware regarding the interest that is levied on availing the moratorium clause.
● 38% consumers prefer to speak or interact with a human interface to get their queries resolved
● Digital is the new de-facto medium for 62% of the loan borrowers reflecting on their need for real time, bias free, consistent & authentic resolutions
● In another frame, about 28% consumers were discontented with the level of conversation with their banks 46% only are satisfied with the banks efforts on explaining the terms of Moratorium to its customers
● 37% consumers stated that they require support from the financial system in the form of essential loans for personal expenditure in the next 12 months
● Lastly, more than 56% customers are now yearning to opt out of the Moratorium.
Sumeet Srivastava, Founder and CEO, Spocto Solutions said, “The year 2020 has proven to be the proverbial Black swan event for all industries and their professionals. This period has also unfolded a few valuable takeaways, namely, that it is time the banking and lending ecosystem revamp their engagement policies and strategies, as their customers may not have the means to pay back their loans within the allotted time-frame. But this also on the other end implies that, they may have the willingness, but not the ability to pay right now. The banks must also keep in mind that these customers who are victims of the market inertia with all probability shall return to the financing space in the span of a year or two with at least 15-20 years of potential service. Hence banks should rather value the long term customer rather than smite down a short term defaulter. The banks too should focus on the heightened optimization of digital and efficient pathways of loan disbursement and recovery to generate greater consumer traction and engagement. This will not only help the ailing sector get back to its feet in due time but will also catalyze the re-building and recuperation of the considerable hammering that the sector experienced due to the catastrophic contagion. “
Lending organizations that prioritizes consumer engagement and digital collections, will witness the resurgence of revenue flows and hopefully carve a better and ebullient future in contrast to the present doldrums of the stifling post-pandemic scenario.