Digital lenders are surpassing old and traditional institutions that are operating since decades and a recent Deloitte report says investments in fintechs who are into lending will increase to $11 billion by the end of 2018 against $9.3 billion in 2017 and $9.4 billion in 2016. These figures are quoted in a recent report on Digital Lending in Banking Frontiers. The report says fintechs which are into lending have innovative schemes and their procedures are quick. What will determine their success is how they scale up, compete and remain in the market.
The report finds that the fintechs operating in the digital lending space have a major handicap now – the recent Supreme Court verdict which restricts financial institutions from making Aadhaar mandatory – since Aadhaar eKYC has been a pillar for them.
The report also mentions that it is important for all the digital lenders to relook at credit card issuance mishap that happened exactly a decade ago. Credit cards were issued freely. Most of the financial institutions burnt their hands when people refused to pay or were unable to pay. Recovery turned into settlements and banks hired goons. Ultimately, RBI intervened. The business of credit is lucrative but not easy. It is an unbalanced model where money can be disbursed within a few minutes but cannot be recovered at the same speed.
