The outbreak of the pandemic has exposed the growing disparity between the few who can access affordable quality health care and the many who cannot. Before the pandemic, countless Indians faced a dilemma, forced to choose between health and wealth. With 63% of India’s total health expenditure paid out of pocket, millions of families are being pushed into financial ruin. Now in the grip of the pandemic, millions of people, as well as the underserved and marginalized population, are faced with this impossible choice.
Driven by the need of the hour, the health sector must pave the way for equitable and affordable access to quality health care. The advent of virtual consultation, remote monitoring and telemedicine is reducing health care disparities, but many problems remain. The opportunity for digital lending in healthcare has never been greater and more urgent. Expected to reach $350 billion in 2023, digital loans can help break the health poverty trap for millions of Indians.
What is Digital Lending?
Digital lending is a FinTech innovation in which all processes encompassing borrowing and lending, such as loan application, approval, disbursement, and repayment, take place remotely through the web or mobile apps. According to the conventional paradigm, individuals facing medical emergencies borrow exorbitant loans from informal lenders or sell their personal assets while waiting for reimbursement from insurers, if any. With digital loans, people can avail instant emergency medical loans by uploading documents to a digital loan platform and get approved with minimal paperwork.
Digital lending apps leverage a combination of business models such as peer-to-peer lending and crowdfunding, along with new era technologies such as AI, automation and data analytics. This allows them to cover health costs and processing fees for borrowers with low credit ratings and low incomes.
Instead of being forced into a vicious cycle of poor health and poverty, digital loans can expand the reach of
inclusive health care for many underserved and marginalized communities.
Growth of digital lending in India
It is estimated that digital loans will grow exponentially, from $9 billion in 2012 to $350 billion in 2023. The global pandemic, largely attributable to this growth, has forced tens of millions of people to turn to digital lenders when faced with life-threatening emergencies and soaring healthcare costs. At the height of the pandemic, countless individuals and families resorted to online health services and instant digital loans. According to the FinTech Association for Consumer Empowerment (FACE), the volume of digital loans doubled to Rs 18,000 crore in the financial year 2021-22.
Accelerated by the proliferation of smartphones and supported by government initiatives, digital lending has the potential to reduce financial bottlenecks in healthcare. The financial disparity that prevents marginalized communities from accessing quality health services can be eliminated through digital lending. Digital loans can expand financial access, which will in turn increase access to healthcare. In a country like India, where nearly 70% of the population is isolated from the healthcare nexus in rural areas, digital lending and telemedicine can enable them to access quality healthcare.
Digital Loans: Means for Financial Inclusion and Healthcare India’s healthcare sector is plagued with several challenges such as sub-optimal infrastructure, affordability, inadequate insurance coverage, etc. Healthcare costs are mostly unpredictable, which is why instant loans through mobile apps for underserved communities
come as a blessing. By combining financial and healthcare innovations such as digital lending and telemedicine, underserved and excluded populations can access quality healthcare regardless of geographic, financial or insurance status. When finance is no longer a bottleneck for health care, India can pave the way to universal health coverage.
Based on the principle of financial inclusion, digital lending can also make great strides in reducing financial barriers in healthcare. By capturing India’s healthcare and credit-starved population, digital lending apps can double their customers. Already the
A preferred borrowing channel for millennials and Gen Z, digital lending can also become a beacon of hope for rural, underserved, and marginalized communities with little or no access to quality health care.
Touted to transform the current state of the credit-starved population in India, digital lending has immense potential to drive financial inclusion through last-mile connectivity. Given their penetration and India’s burgeoning population, digital lending platforms have barely scratched the surface and have many miles to travel and many lives to impact. With the help of new age technologies combined with healthcare innovations, India can achieve both financial inclusion and universal health coverage.
The opinions expressed above are those of the author.
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