Credit Cards – Under Penetrated, 4 Bn Dollar Profit Center for Next Decade

Over the next decade, the Indian domestic credit card sector offers an annual profit pool of $4bn (10% of banking sector profit), primarily driven by rising penetration (new customers) as the product segment remains highly under-penetrated. To put this in context, TransUnion CIBIL estimates that only 25% of the adult population in India is currently credit-active.

India currently has just 45.2mn credit cards outstanding compared to 931mn debit cards. CIBIL database indicates ~210mn customers having score of 700+ (prime / prime plus customers). Changing consumer behaviour/preference toward consumption/personal loans Read the rest of this entry »

The Business of Credit Card in India Today – Part 1

The credit card base has grown at a 18% CAGR during FY14-FY18, the current credit card base is only 45mn – this compares to 210mn customers with a 700+ CIBIL score (Super-Prime, Prime Plus and Prime), implying a 20% penetration and massive headroom for growth while staying on the same risk curve.

2 Big Credit Card Business Models in India The primary business model is centered on internal-to-bank customers (in practice at larger banks) while a secondary business model is emerging around new-to-bank customers (in practice at mid-sized banks). Large banks with a sizeable customer franchise grow their credit card portfolio purely as a cross-sell offering to their Read the rest of this entry »

ZestMoney and LazyPay – New Age Just in Time Loans for Millennials

Digital penetration has increased at a swift pace over the past few years in India. The decrease in average data cost and drop in price of smartphones has resulted in higher internet activity. This has promoted digital transaction and online purchases. PayTM, MobiKwik, etc. started the digital payment revolution and these platforms have expanded vertically. UPI has increased at a sharp pace in India. New entrants like PhonePe, Google Pay, etc. have increased digital payment adoption in the past two years.

ZestMoney‘s co-founders were inspired by the scope of digital lending in India while working in London. Urbanization and rising aspirations of Indian consumers, alongside the discount model of the online e-commerce industry, has fueled the swift pace of growth in online purchases. E-commerce is expected to Read the rest of this entry »

Consumer Lending DataPoints – CIBIL Analysis

TransUnion CIBIL, a leading credit information bureau, shared some insights on behavioural trends in consumer / business lending in India. TransUnion CIBIL now has records of 400mn customers, of which 185mn customers have access to live retail lending facility. Within this, 85mn customers fall in consumer lending segment and ~100mn in business lending and others (agri, PSL etc). The company adds 15mn -20mn through new to credit route, 15% of overall.

There is improving penetration (breadth rather than depth) is reflected in unique customer enquiry growth accelerating from 27% in Q2CY18 to 43% in Q4CY18. Encouragingly, single product single account customers constitute 40–45% (in terms of volumes) for Credit Cards, Personal Loans & Consumer Durable Loans. No doubt, the cross-selling trend is on the rise—multi product multi accounts (MPMA) up from 32% in FY16 to 37% in FY18. That said, asset Read the rest of this entry »

How BankBazaar and Wishfin are Transforming Lending / Financial Savings / Insurance for Gen Next?

Smartphone penetration, availability of cheaper 3G/4G Data Plans along with idiosyncratic events like demonetization offered have transformed how gen next India financially transacts leading to higher traction on Platforms such as BankBazaar and Wishfin. They are an intermediary between the end consumer (who wishes to purchase a product, physical or financial) and financiers (banks, insurance, AMCs).

Digital platform penetration for sourcing loans and cards is expected to grow in the next 10 years to 60% from 15%. The number of visits to bankbazaar.com grew from 3 mn visits a month to 40 mn visits in a span of three years so is the exponential rise in traffic to Wishfin. Both have a strong online market presence and work with all the leading financial institutions in India.

The typical customer that visits Read the rest of this entry »

Rise & Future of ATM for Cash Transactions in Digital India

India has seen explosive growth across all digital channels i.e. POS, credit cards, debit cards and wallet payments. However, currency in circulation (CIC) has grown from Rs17 tn in 1HFY17 (pre demonetization) to Rs21 tn as of FY2019, thus signifying that despite increasing digitization of transaction, cash remains core for the Indian economy, large amounts of cash is used for Corruption by Politicians and Government Officials.

The ATM Demand – The quantum of ATM transactions have increased substantially over the past few years, especially in semi-urban areas. This is driven by government initiatives like PMJDY and DBT scheme etc. These demand levers Read the rest of this entry »