The Future of Lending in 2025: How Technology is Empowering Sustainable Practices in NBFCs
By Abhishek Jain
The Non-Banking Financial Companies (NBFCs) sector has witnessed significant growth over the past two years, fuelled by the emergence of modern NBFCs offering personalized products and targeted services. This has further bolstered the financial ecosystem. As this upward trend is set to continue into 2025, it becomes increasingly vital to harness advanced technologies to drive digital transformation and ensure sustainable growth.
Innovative technologies now enable businesses to decarbonize their operations, infrastructure, and supply chains, thereby reducing carbon footprints and expediting progress toward achieving net-zero goals. Sustainable practices, such as server virtualization, energy-efficient hardware, AI-driven resource management, and code optimization to minimize computational resource usage, are rapidly becoming standard in the industry. The financial sector is steadily embracing these green technology solutions as part of its evolution.
Focusing on innovation and adopting green technology practices in the following areas can significantly contribute to the overall digital transformation and advancement of the financial industry:
Digital Customer Onboarding and Loan Processing
One of the key advancements in this area is the adoption of digital KYC (Know Your Customer) or eKYC. This process allows NBFCs to verify customer identities remotely, reducing the need for physical documentation and in-person visits. As a result, onboarding is faster, paper usage decreases, and the environmental impact of traditional KYC methods is minimized.
Aggregators also play a crucial role in enhancing NBFC services. Account aggregators collect and consolidate financial data, offering a more comprehensive view of a customer’s financial profile. This improves risk assessment, loan processing, and allows NBFCs to offer personalized financial solutions. Payment aggregators streamline digital payments, further eliminating paper-based transactions and boosting payment speed and transparency. These systems also enable seamless transactions for green investments, allowing customers to easily support sustainable projects.
Additionally, the shift to E-Signed digital contracts reduces paper waste, storage needs, and energy consumption by enabling customers to sign documents electronically. Similarly, E-NACH allows for paperless loan repayments, reducing physical checks and paperwork, while improving payment efficiency. The use of e-statements and automated notifications reduces paper usage and postal deliveries, minimizing waste and carbon emissions.
Advanced data analytics and machine learning help NBFCs assess risk more accurately and create tailored financial solutions, enabling investments in green projects, such as renewable energy, energy-efficient housing, and sustainable technologies. These innovations promote sustainability while improving financial services.
Leveraging IoT technology
Leveraging IoT devices and data analytics in green asset management provides significant benefits, from real-time monitoring of asset performance to measurable insights into carbon reduction and transparent reporting. These technologies help businesses and individuals track and enhance their environmental impact while fostering more efficient and sustainable operations. This contributes to global efforts in combating climate change, while simultaneously improving operational efficiency and supporting sustainability goals.
A key advantage is cost reduction. By optimizing asset performance and minimizing downtime, companies can lower operational expenses. Additionally, these technologies enable sustainability tracking, allowing businesses to measure their environmental impact with accuracy and transparency. This not only demonstrates their commitment to sustainability but also provides clear evidence of their contributions to environmental goals.
Real-time data allows for data-driven decisions, enabling businesses to prioritize maintenance, invest in green technologies, and optimize asset performance. This helps in improving long-term operational efficiency. Moreover, stakeholder engagement becomes more impactful as companies can share real-time performance and environmental impact data, fostering trust and showing their commitment to sustainability.
The process begins with data collection, where IoT sensors gather performance data from assets. This data is transmitted to cloud systems, where it is cleaned, aggregated, and analyzed. Predictive analytics can forecast when maintenance is needed or when performance may decline, preventing costly downtime and ensuring assets function optimally.
Carbon emission tracking is an essential aspect of IoT. By using sensors to monitor renewable energy generation, such as from solar panels or wind turbines, businesses can calculate the carbon emissions saved by avoiding fossil fuels. This data offers a clear understanding of their environmental impact and the effectiveness of their green investments.
Building Collection Efficiencies
AI based technology platforms are making collection efforts seamless and more efficient. Data driven AI models help reduce resources and enable the end customer to be at ease by reducing unintentional defaults.
Collection data can further be utilized for profiling customer behavior and help build targeted strategies for approaching customers. E-mobility solutions can be utilized for better on ground support and visibility and tracking of customer behavior firsthand. Customer behavior can further help enhance customer risk profiling and thus reduce future defaults.
Other collection actionable such as repossession and legal proceeding can be easily tracked by integrating with e-courts and re possession dockyards respectively, reducing waste and building efficiencies.
Data Quality and Data Monitoring
Ensuring data hygiene, particularly for customer and loan data, has long been a persistent challenge in the financial industry. Poor data management directly impacts loan servicing, leading to operational inefficiencies and increased customer grievances. With the rise in Assets Under Management (AUM) and the introduction of unconventional product offerings, the importance of automated reconciliation and continuous data monitoring has become indispensable.
Leveraging advanced AI tools and data models can streamline the process of cleaning legacy data while maintaining oversight of new data generation. Over time, this approach fosters data consistency, reduces waste, and optimizes resource utilization, contributing to smoother operations and enhanced customer satisfaction.
Conclusion
The lending landscape in 2025 is set for a transformation, shaped by technological progress and a growing emphasis on sustainability. NBFCs are uniquely positioned to harness these trends to build a more inclusive and eco-friendlier financial ecosystem.
By adopting technologies like IoT, data analytics, and sustainable practices, NBFCs can streamline operations, minimize environmental impact, and deliver more personalized services, gaining a competitive edge in the process. Prioritizing innovation, sustainability, and customer-focused solutions will allow NBFCs to drive growth, foster positive change, and define the future of lending in 2025 and beyond.
(Co Authored by Abhishek Jain – Head BSG & Digital and Himanshu Sharma – Head Core Technology, Ecofy Finance Pvt. Ltd a Green NBFC, and the views expressed in this article are his own)
