Digital lending mkt may cross $1.3trn by 2030

Mumbai: India houses over 6,000 fintech firms with a market value worth over $30 billion. Of the 105 unicorns produced by the country, 22 are from the fintech ecosystem, set to generate $200 billion revenue by 2030, says a PwC report.

Amid this unrestrained growth trajectory, India’s leading app-based consumer lending platform SmartCoin Financials, released a consumer report for the 2021-2022 fiscal year, where the company highlighted the sector’s growth momentum and predicted its shining future, underlined by greater collaboration and consolidation. This brought with it more normalised and regulated growth.

India’s digital lending landscape has been fostering innovation and competitiveness. The transformation further accelerated with the advent of Covid-19 and players revamping their business models to stay resilient and agile.

The study talks of ‘tale of two halves’ of 2022, where the first half witnessed unencumbered growth of NBFCs and lending institutions with strong tech capabilities, innovative business models, and tailored financial products and solutions.

In the next half of the year, the RBI addressed the rising concern of unscrupulous lending practices with its digital lending guidelines revolving around consumer protection and data security. This brought with it more normalised and regulated growth owing to compliance related shifts among players. However, recent industry developments indicate advancement in the right direction and overall transformation in the financial sector.

SmartCoin saw exponential growth across the board in FY22, outperforming the industry and the average market. In line with consumer demands, the company launched products like digital gold savings to drive deeper engagement, boost positive unit economics, and narrow the demand-supply gap. It diversified into savings products to offer a one-stop digital financial platform prioritising the protection of consumer interests. It earned more than a million active monthly user base, over 10 million registered users and served 19,000+ pin codes in the country, with half the borrowers from tier-3 and tier-4 regions.

SmartCoin also hired aggressively during the financial year to strengthen the mission of bringing tech-driven financial inclusion and holistic consumer wellness. It witnessed a 470 per cent revenue growth in 2022, with 130 per cent growth in new loans and borrowers, 241 per cent growth in repeat loans, 80 per cent growth in average ticket size, and a 4X+ growth of loan disbursal amount.

The company extended its services to the top 10 cities of India, equilibrating a fair share of metro and underserved tier-2 and tier-3 cities.

Talking to Bizz Buzz, SmartCoin’s CEO and Co-Founder, Rohit Garg says, “Our consumer satisfaction score remains healthy at 80 per cent, with the female customer base rising from 10.97 per cent in FY21 to 13.78 per cent in FY22. During the fiscal, Playstore drove the largest discovery of our app, followed by word-of-mouth referrals, YouTube, and Facebook.”

As the global economy rises from inflationary pressure, India will continue enjoying healthy growth in retail lending and the consumer market. Grade-A conglomerates will foray into retail, inspiring investment confidence within private equity firms into the space.

SmartCoin predicts the tectonic shift will encourage more market consolidation, with increasing collaboration between emerging and established players and bank-fintech partnerships. The guidelines will herald more transparency and consumer-centricity within the sector, with an overall rise in investor confidence and an opportunity for smaller players to scale up.

The co-lending industry will witness a significant boost, focusing on profitability, sustainability, and diversification of its product portfolios. The competitiveness and evolving consumer demands will catalyse innovation and engagement, ultimately benefiting the customers. At large, customer service will come to the forefront, with immediate credit remittance, comprehensive financial services, lucrative rewards, and transparency around transactions.

India’s micro-lending sphere is more resilient over the global economy with healthy consumer demands and concerted efforts in bridging the demand-supply gap. RBI’s new digital lending guidelines will put the sector in a more evolved position, safeguarding consumer interest, increasing transparency, fortifying consumer trust, and inspiring industry innovation.

The year 2023 will demand active reforms from the key players, with an anticipated rise in cost of compliance. Enterprises will relatively normalise and consolidate, with an overall regularisation of the growth rates. Fintech firms will provide more tailored services with AI-driven chatbots, credit judgments, sophisticated fraud prevention, risk management, and regulatory compliance.

Financial institutions will collaborate with fintech platforms to improve their AI operations, search engine optimisation (SEO), lead generation, and deal closures.

In essence, full-suite credit and financial wellness solution providers like SmartCoin will cater to the underserved segment by helping them build a credit profile and include the underbanked borrowers in the economic mainstream.

According to Garg, “Spurred by the pandemic and supported by continued differential regulations, strong tech capabilities, and innovative business models, the first half of 2022 saw the NBFC and the lending ecosystem registering unencumbered growth.

With focused understanding of the diverse needs of their customers and tailored financial products and solutions, players in the ecosystem fostered spirited innovation and competitiveness. Come the second half, the rising concerns around unscrupulous lending practices were addressed by the central bank in its watershed digital lending guidelines centred on customer protection and data security.”

While this part of the year saw more normalised and regulated growth owing to compliance related shifts among players, recent industry developments indicate advancement in the right direction and overall transformation in the financial sector.