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 bankbazaar / wishfin is internet savvy, and will have had the experience of using other e-commerce platforms. This leads to higher product activation rates and better credit quality.
Trust Developed for Submission of Personal Documents – Consumers are now comfortable with submitting their documents on an online platform for the convenience of a faster turnaround time on an application for financial services product. A marketplace like bankbazaar eliminates the need of a physical touchpoint for a yes/no decision on an application. 50% of customers looking for an unsecured loan now choose to submit documents online.
Customer Acquisition & Retention – Products like credit cards typically see higher activation rates from digitally sourced customers as against those customers offered such products through offline channels. By virtue of visiting a website to avail of a product, the customer is essentially a “pull” customer. In a traditional channel, only lending products are “pull products”, other products like investment or insurance products are predominantly “push products”. In an online channel, however, all financial products are essentially “pull products”. Credit cost on loans sourced through digital platforms is lower for Banks. A majority of customers are salaried and mostly are from top 10 metros. A majority of customers have 700+ credit scores with annual income of more than Rs 0.3 mn.
These platforms have advisors who offer neutral advice and transparency to the consumer, apart from reducing the information asymmetry about financial products even while it is a low cost swift acquisition tool for financiers at the early stage of customer life-cycles (cost per lead for a personal loan is ~1/10th of other channels).
Wishfin Leverages the Popular WhatsApp Platform – Wishfin has two algorithms to ease customer acquisition and retention strategies: (1) identify customer acquisition channels and (2) improve customer lifecycles. Its customer centric nature coupled with continued product innovation leads to rapid customer addition. Wishfin was the first company to enable opening SIPs via WhatsApp and offer free credit scores to consumers. The company has now tied up with Bharti Axa to offer 2-W insurance via WhatsApp.
The overall market share of online fintech players in overall credit disbursal or insurance premium is quite low. Home loans and personal loans conversions (post-apply) have revived, though business loans continue to decline. A financial services market place earns revenues from banks/NBFCs on a per application basis.