BENGALURU: Until some years back, a student would rely on her parents for pocket money expenses or a traditional bank for supporting higher studies. However, with the advent of fintech revolution, India’s young population in the age group of 18-35 years is increasingly turning towards instant loan/ investment apps to meet their financial needs using smartphones. Over the past five years especially, hundreds of fintech service providers have come up targeting the GeZ and millennials for addressing their personal finance concerns ranging from availing loans to buy a new gadget to opening trading accounts.
The pandemic has accelerated digital as well as financial literacy, top fintech analysts say. With a lot of people losing their jobs, facing salary cuts, an alternative source of income is being considered as an imperative, which has in turn fuelled the further growth of these new-age fintech applications.
Take the case of Ratan Tata-backed brokerage start-up Upstox. The platform has seen a 3x growth in the number of customers during 2020-21 with a total userbase now at 4 million. “Of Upstox’s total customer base, 80% are between the age group of 18-36 years, and around 70% are first-time investors. We have witnessed the maximum number of first-time investors,” said Ravi Kumar, co-founder and CEO, Upstox.
Compared to investment banking or asset management companies (AMCs), the digital-first companies like Upstox and other players, including Zerodha and Groww, offer convenience, more product offerings as well as reduced costs to customers, which goes hand-in-hand with educating the newbies.
These apps and fintech platforms enhance accessibility to financial products and make investment or managing funds simpler and easier. With Aadhaar-enabled KYC process, onboarding of customers through these platforms are fully digital. Big data and data analysis empower them to offer customised financial products to their customers.
“Being digital-first in everything we do is in our DNA, and it really helps us grow and build a rich user experience. We have been growing at a rapid pace, mainly due to our products and a customer-first approach. Today, customers are well-aware of how to identify a high-quality service that meets their needs and gives them a seamless experience,” Kumar added.
Agrees Aditya Damani, Founder of Creditfair which offers low-cost, unsecured loans to customers at point of sale for purchase across sectors like health, education, automotives and electronics. “Micro loans given to individuals via lending apps have given access to credit to many such underserved customers. For microfinance customers who take joint liability loans, lending apps by banks and microfinance institutions have given convenience of digital repayments.
Especially during this pandemic many migrants who chose to set up small businesses have been greatly benefitted,” he noted. With the unbanked population in India at nearly 200 million, the market opportunity for the neobanks, which are mostly non-banking financial companies (NBFCs), is huge. Gurgaon-based fintech start-up Fyp last month announced the pre-launch signing-up of their money management product for the GenZ segment between the age group of 11-18 years.
The neo bank will go online by the end of July but it has already started getting traction among the target audience, which also includes young parents between the age group of 35-45. The startup claims to change the pocket money management concept in India and helps parents make their kids develop financial literacy concept and become financially independent at an early age. By using the Fyp app, kids can do all financial transactions, both online and offline, securely through the Fyp app and Fyp Prepaid Card.
Safety first
However, the down-side of these mushrooming neobanks has alarmed the Reserve Bank of India (RBI) as well as tech giant Google which earlier this year removed hundreds of such apps from its Play Store, finding them violating the firm’s safety policies. Some of the lending apps were also caught in the police net recently when cases of death by suicide of borrowers emerged, with their families alleging that the lenders subjected them to social humiliation as well as exploitation on non-payment of dues.
“The credit gap can be fulfilled by nimble-footed fintech start-ups towards empowering the end consumers. But unfortunately the cost has been prohibitive and the collection practices were questionable. Lending during pandemic has its own challenges, and it has become increasingly crucial since the pandemic started and feet on street driven collections became difficult. That leads to a bad debt,” said Damani.
Pandemic pushes financial literacy
Broking platforms
Zerodha, Upstox, Groww, Angel Broking app, 5 paisa app, ND MoneyEdelweiss app, Stoxkart app.
Various features
Access to a variety of SIPS, mutual fund schemes
Two factor authentication for safe access to your digital lockers/ trading accounts.
Realtime intraday NSE, BSE trading within the app interface
Single signup for opening trading/ demat account( paperless)
Zero brokerage charges/ commissions
Top lending apps in India
Credy, MoneyTap, Paisalo Digital Liwmited, TrueBalance Decimal Technologies, Cashfree, KreditBee, EarlySalary, LoanTap, EarlySalarY
Features
Acess credit from Rs 1,000 to Rs 10 lakh through these channels
Paperless loan application Small ticket EMIS Collateral free loans (mostly based on your credit scores)