Digital Lending Will Hit USD 1 Trillion, says BCG’s report
Moneylife Digital Team 21 July 2018
Digital Lending will be a $1 trillion opportunity in India over the next five years, says a Boston Consulting Group’s report. As per the report, digital retail lending has seen explosive growth both globally and in India. 
The report lists four fundamental drivers that have come together to turbo-charge this space – first, internet giants have changed the way consumers behave – giving rise to the digitally-savvy ‘Internet Homo Sapiens’. Secondly, there have been rapid technological advances including the proliferation of smartphones and a consequent increase in the consumption of data. Thirdly, the digital lending market has prospered under supportive regulatory conditions across the globe. Finally, lenders have created remarkably innovative models such as peer-to-peer lending and ‘value +’ lending, fueled by demand from messaging service providers, telcos, cab aggregators and online marketplaces. Similar factors have played out in India as well.
In India, customers have become accustomed to purchasing things online. The recent $16 BN take-over of Flipkart, an e-commerce website in the country, by American retail giant Walmart is a proof of that. Today, there are over 1,000 fintechs operating in India and their digital models have assumed a broader scope and coverage. Even traditional banks have partnered with fintechs to digitize their lending value chain through biometric KYC, pre-approved home loans, instant personal loans for short-term, etc. These factors have fueled consumer demand resulting in the digital lending boom in India.
Vikas Agnihotri, Director Sales, Google India  who contributed in the primary research, endorsed the study says "Improved connectivity and smartphone usage have exploded in India, this combined with the Indian government’s drive to get everyone a bank account as well as NPCI’s pioneering work in setting up the UPI payment network and infrastructure — allows for a lot of new innovative approaches for the digital lending Industry. We believe India is at a cusp of significant wave of change lead by fintech, and represents a huge opportunity for the lending ecosystem to innovate and invest in newer models to reinvent lending in the country.”
India had 1.18 billion mobile subscribers at the end of 2017, second behind China at 1.4 billion. On an annual basis, Indians do 340 billion online searches, view 810 billion web pages, watch 53 billion online videos, and make 300 million e-commerce transactions and 8 billion digital banking transactions. Indians consume 5.70 GB of data per month, whereas China consumes lower at 2.30 GB per month. Lenders are leveraging big data to reduce the cost of consumer acquisition. Marketplaces like Paisabazaar have made short-term lending of 30 to 90 days for amounts worth Rs5,000 to Rs1 lakh very simple for its users. The digital loan application process is completed in minutes and the loan is disbursed in a couple of hours.
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