Fintech companies taking advantage of boom in retail lending

Retail lending, the loan against property and credit cards along with unsecured small value business loans etc, has seen a boom lately. This boom has not only helped banks grow their credit portfolio but has also given a major boost to fintech companies in the lending space.

Now that the banks are trying to reach out to as many customers as possible for their credit products, these technology companies are also using their customer assessment capabilities, coupled with superior reach through online means, so that they can expand the consumer base of banks and NBFCs (non-banking finance companies), while charging them accordingly.

Also read: This Startup is disrupting the lending space by providing free consumer services

The personal loan portfolio of banks has seen a 12% year-on-year growth, which has made companies like Rubique, CoinTribe, Paisabazaar and BankBazaar expanding their businesses.

"We had done disbursals worth Rs 250 crore last year and that went up by four times to Rs 1,000 crore this year, and we hope to increase it by Rs 2,000 crore for the coming year," said Rubique founder Manavjeet Singh.

Also read: Unsecured retail lending is rising in private banks and this could be dangerous

With these digital platforms, customers find it easy to access small-value credit products for consumption, and not to forget unsecured business purposes. However, there are several roadblocks that prevent these companies from realising their full potential.

"We get around 17 million visitors on our website checking credit products and checking their eligibility, but only 1-2 per cent of these applications actually convert into disbursals for us because the maximum drop-off takes place in the last leg of the application which still has to be done physically," BankBazaar CEO Adhil Shetty told ET.

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