Digital Lending Market in India
Digital Lending Market in India
With more people opting for the digital mode of payment, and the digital shopping, the large portion of the people I India are already availing the unmatched benefits of the digitalization in the various sectors. With the rapid digitalization, especially which has been seen in the past few years, the availability of the internet at every corner of the country and the low priced Smartphones, which are now within reach of the people have allowed the people in India, go Digital.
Digital Revolution in India
The Digital Revolution can be seen in various sectors, which includes the Online shopping and thus breaking the shackles of the traditional shopping. The same can be seen in the financial market, which has seen a face of change over the last few years, especially with the roaring availability if the internet and Smartphones. More people are getting used to the digital transaction, as digital transaction comes with several benefits; there are a huge number of people who are now seeking the financial help, in the form of loans, a digital way.
Rise of Digital Lending Market
With the advent of technology in the country and ever-increasing consumption of internet in the country, there are several players that are utilizing this opportunity to offer something better to the people and in return get a business expansion. For the Fintech, Banks and other NBFCs, the opportunity has already open doors for the business expansion and to connect with the consumers, in a much easier and efficient way. These firms are working frantically towards solving the problems of the people, which stands in the way for the disbursement of the credit and other financial help to the people. In the process, are making sure that the entire process is quick, easy and safe.
Increasing online ticket sizes for various loan types
Take a dive deep into the stats and understand how the Online Lending Market has been on the rise.
As per the data collected for the year 2017, the Online lending process has surpassed the traditional mode of loan disbursement and the details can be found below:
Home Loans – In 2017, the home loan disbursed online was 1917.8 (in INR ‘000) as compared to offline figures of 1862.8. The share of loan disbursed online thus stands at 22%
Personal Loans – In 2017, the Personal loan disbursed online was 247.4 (in INR ‘000) as compared to offline figures of 247.4. The share of loan disbursed online thus stands at 22%
Car Loans – In 2017, the Car loan disbursed online was 460.5 (in INR ‘000) as compared to offline figures of 488. The share of loan disbursed online thus stands at 23%
Two-wheeler Loans – In 2017, the Two Wheeler loan disbursed online was 48.1 (in INR ‘000) as compared to offline figures of 41.2. The share of loan disbursed online thus stands at 25%
SME Loans – In 2017, the SME loan disbursed online was 921.1 (in INR ‘000) as compared to offline figures of 646.1. The share of loan disbursed online thus stands at 23%
This, clearly shows that the Online ticket sizes for the Online loan disbursal are far greater than the Offline ticket sizes in most categories, and even in the categories, where it is lagging behind, is fast covering the gap and surely will cover it in next few years.
As per the forecast, the digital lending stands at 3.9 trillion INR in 2017, with the estimates at 5 trillion INR, and with the stats rising to 7.5, 10.3, 13.7, 18.5 and 24.0 in the next upcoming 5 years, respectively. Also, the current market share which stands at 23% for the digital lending, will see its total market share standing at 48% in the year 2023.
The shift from Offline Market to the Online Market
The country is witnessing the rapid shift of the lending market from offline to the digital. The introduction of the artificial intelligence and automation in the loan process has thrown out, the offline tedious and conventional mode of the lending process. The online digital lending process is a simple, quick and efficient which involves the easy documentation check and instant approval, which is a need of today, with the lifestyle going very fast. Gone are the days, where the people prefer offline lending and numbers are the days of the offline lending process in the market.
The need for the Digital Lending Process
The country always felt the need for an evolution where the push for the digitalization was always needed. The advancement in the digital technology and helping people with the ease of doing things was always felt. With the easy penetration of the internet and easy availability of the Cheap Smartphones in the country over the last few years, the Digitalization has crippled various segments in the Country, and the finance industry is no different. The need for the digitalization was always felt in the lending process, owing to various factors:
The Disbursal Time is one of the deciding factors in any loan. While there are many cases where the instant cash is required, the slow disbursal can result in killing that need. With the traditional method of the disbursal of a loan, it would a long time for the sanctioning of loan thus in most of the times, people opting for various other sources of instant cash to meet their urgent requirement. But with the Digital lending process, the people can expect a quick disbursal and thus solving the needs, instantly.
No physical Documentation needed
The Digital Lending process eliminates the need for the physical documentation; thus pushing the process towards the easier, and quicker.
Hassle Free and Smooth Process
Everybody likes to go through the most convenient approach for the lending. With the traditional method of the lending, being tedious and involved complex meeting etc, the digital lending process, smoothens this process and makes it hassle-free.
Not very long time ago, the mentality of the people towards going digital imbibe a feeling of the security risk. But, now with the advent of several automated security software and even more secured approach towards carrying the digital process, the people can easily opt for the digital lending process for their loan needs and demands.
A Reasonable rate of interest
With the traditional approach of loans involves the rates of interest hovering around 20%, the digital lending has lower this rate of interest towards the 15% mark.
With the complete transparency in the approach while carrying out the loan process, where the borrowers can keep a track of their loan application status and can know every other minute details, the digital lending has been a transparent one and at the same time, an ideal option in case of emergencies!
Evolution of Various Fintech Firms and NBFCs
Over the years, things have been changing at a rapid pace. The faces are changing and more fintech companies are evolving in this market and offering a tough competition to the bans and other traditional financial institutions. It has been seen that the Fintech Companies and NBFCs have become the first preference for the younger generations. With a market share of approx 49%, these companies (NBFCs and Fintech Companies) are taking over the conventional lending agencies.
There are various reasons for the NBFCs to perform better than the traditional banks. When it comes to the easy and quick loan disbursal, the business models of these firms have been more suitable to the loan seekers. The flexible and easy to avail products allows the loan seekers with the convenience of the simple process. With the Digital India concepts, the NBFCs are fast capturing the digital lending markets, and it has been seen in a survey that the firms having flexible and easy rules and regulation for the loan approval are the most preferred by the consumers.
Digital Concepts have been changing the way of the loan process
With the aim to alter the whole working process, there are several fintech companies like DealsofLoan and NBFCs that are changing the working model of the lending process. With the utilization of the various advanced technology, these fintech firms in a bid to accelerate the process of the lending, they have leveraging the benefits as available from the digital mode.
With the availability of the various loan products at one stop, and in a more convenient way, the various companies and stand-alone customers can access the various loan products like Personal Loans, Business Home Loans at one place and round the clock. With the better utilization of the online technology and better-advanced automation, the entire lending process starting from the application to the verification and from approval to the disbursal is quick, efficient and easy.
What is more beneficial in going the digital is that the whole process is made very simple, easily understandable and transparent. Even there are several fintech companies, which are coming with more innovative products for the hassle-free Personal Loans and offering several multi-featured apps and online lending platforms to the people who are in dire need of the best services seeking easy, cheap and quick cash.
Rise of the Personal Loans
The Scenario of Personal Loans in India has been on a change and with the lending and borrowing of the personal loans, in a much easier way has pushed the demand for the personal loans, even more. The Demand of the digital finance is on the rise and thus the personal loans have benefited a lot, because of the less documentation and less paperwork involved, and thus the Personal Loans segment has grown exponentially over the years recently.
As per the data and stats collected, the Personal Loans got a rise by around 36.5% over the years, while in the same period the Credit Card portfolio has risen to around 37%. When you combine both; Personal Loans and Credit Cards contribute around 30% of the total outstanding debt. The Indian banks have also been as rolling out unsecured personal Loan Products as a way to the credit growth.
As per the data furnished by the ICICI Bank and HDFC Bank, the ICICI Bank saw a growth of 41% in its unsecured credit card and personal loan portfolio in the last fiscal year, while the HDFC Bank reported a rise of 39% in credit cards and 44% in personal loans. The same story is for all other banks an all of them including SBI and other banks have reported a same rise for the Unsecured Personal Loans over the last financial year.
Diving more into the stats and data, personal loans registered the highest growth among all sectors with an increase of 20.4% for the month of February 2018, as compared to a 12% increase for the same period in 2017. Thus, whatever aspects, you compare the growth of Personal Loans, this unsecured Loan type is on the rise and is mostly catching the attention of the People due to the easy availability and it’s being accessed digitally.
In fact, the country ranks as the second biggest marketplace for the Smartphones and ever since the internet quality and speed is improving, with it getting cheaper, the Indians are adding pace and quality in their technology and are turning the way, they live. The free mentality and the push towards the achieving of dreams have pushed the Indians towards the loan market. The digital technology has allowed this push to be more effective, with the easy availability of loans, digitally and with the minimal documentation and fast approvals.
Many banks and NBFCs can be seen as breaking the geographical barriers and more in this aspect will be seen in upcoming years and can be seen as offering several loan types Online. The Digital Bandwagon can be seen arriving here in India, and it’s going to stay here for many long years and serving the people with the digital Loan Needs and thus taking the digital Lending Market to the pinnacle of its success!