personal finance

Fintech lenders find favour with millennials


Mumbai: Speed and ease-of-doing-business seem to have driven fintech lenders to take giant strides, surpassing banks and nonbank financiers in the small-ticket personal loans segment in top Indian cities.

The fintech lenders’ share of loans below Rs 50,000 to new customers grew to 45 per cent in the second quarter of FY18 from 11 per cent at the beginning of FY17, according to data acquired by ET from credit scoring agency CIBIL. The growth of new loan accounts in this ticket size fell to 12 per cent from 63 per cent for banks during the same period.

The fintech lenders opened 2.19 lakh loan accounts in the second quarter of FY18 — up from 20,000 in the first quarter of FY17, while customer acquisition by NBFCs rose to 2.14 lakh from 48,000 in this period, and banks registered only 59,000 new loan accounts, down from 1.17 lakh, during this period.

“We’ve seen over few quarters that fintech lenders are making quick inroads into the market in certain retail loan categories, especially small-ticket personal loans,” said Harshala Chandorkar, chief operating officer at TransUnion CIBIL.

“From a consumer’s perspective, the entire digitisation experience that these new-age fintech players are able to bring has changed the industry rules… Loans are getting underwritten and sanctioned twice faster and banks will face stiffer competition from these companies as the industry evolves further,” she said.

These nimble finance technology companies are challenging the reign of big banks with their quick credit appraisal and disbursement. Setting aside the huge documentation process of banks, these companies are using digital records to assess the creditworthiness and track-records of clients.

The fintech lenders, comprising mostly startups backed by serial investors, disbursed 65 per cent of loans to millennials below 30 years age and 67 per cent of these loans were disbursed in tier-1 cities over the six quarters. In comparison, only 27 per cent of new loan accounts opened in private sector banks and 11 per cent in public sector banks were to customers below 30.





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