Micro-loans and financing for the underbanked are making a big difference in the region
Asia, in the last couple of years, has seen immense growth in the e-commerce sector, with numerous startups burgeoning into mammoth enterprises. This growth has been driven by consumer finance organisations and the banking sector, which have put forth new trends catering to the consumer demands.
The financial institutions took cognisance of the eager buyers, mainly millennials, and in the last couple of years, the credit card penetration in countries like India, Indonesia, China and Malaysia, etc., has seen an immense rise.
They helped convince consumers to overcome their reluctance to spend too much money and to go ahead and splurge on online shopping. They had the option of buying and paying later or even converting their spending into easy installments. However, still, a bulk of the population in these countries does not own a credit card.
This is how a new crop of equated monthly installment (EMI)-based consumer finance startups is emerging. These startups work as a middleman between e-commerce stores and consumers, allowing users to convert their purchases into EMI without any credit card. Data analysts say that these consumer finance startups will see at least 40-50 per cent growth in the near future and also help e-commerce stores increase their user base as well as sales.
Let us take a look at some of the prominent EMI based fintech lender startups In Asia.
Backed by eBay Founder Pierre Omidyar through his investment firm Omidyar Network, ZestMoney has developed a tech platform which has automated credit appraisal, disbursement, and installment collection. This fintech lender has already collaborated with over 40 e-commerce stores to offer easy EMI installments without the need for credit card. Their automated system allows consumers to finance their purchases at the checkout stage instantly. Because their system is integrated into the e-commerce store itself, the consumer only has to choose ZestMoney as a payment option to process the payment.
It is a consumer finance and installment service platform for college students. This startup caters to a segment which does not have a credit history or a credit score. Students can just browse through e-commerce stores, find the product they desire and paste the URL in the app. They can then choose their EMI plan and make the purchase. Because it only targets students who do not have bank accounts or credit history, their user base is somehow limited.
It is another fintech startup that uses data and machine learning to reassess the creditworthiness of borrowers for the disbursal of loans. By using more than 22,000 data points analyzed by their algorithm, they give out small-ticket loans ranging from US$75 to US$4,500 in the form of EMIs.
Other than online stores, they also offer their service at POS, but only after the consumer has been vetted by them. Rather than working with the ecommerce stores, they work as a standalone lender, where a consumer directly comes to them, lists the product, chooses the EMI plan and requests the loan.
It offers collateral free loans to consumers for products that they want to purchase. They have partnered with several merchants making it easy for consumers to convert their purchases into EMIs. All they have to do is choose Kissht as a payment method during checkout, login to their Kissht account, choose an EMI plan and process the request.
However, it takes 36 hours for that processing to take place after which the merchant is notified and purchase is completed. They boast of over 9000 customers and have dispersed more than US$2.5 million worth loans.
This microlending platform offers short-term loans to mainly college students who want to make online purchases. By analyzing 1,000 plus online and offline data signals, the Quicklo allows consumers (students) to purchase from top e-commerce stores. Students need to submit their IDs and contact details of family members to apply for the loan. Their user pool is however limited as they target mainly students. Like Finomena, they also act as a standalone lender and offers service on products that are in their catalog.
Lending startups or fintech micro financers are on fire in Asia. With growing economies and access to the internet, consumers — especially millennials — are jumping on the e-commerce bandwagon. Each and every lender works on a different business model. While some like Finomena and Aiyoumi work as a standalone lender where consumers come directly to them for lending purchases, platforms like ZestMoney make the overall process hassle free by partnering with e-commerce stores directly. These startups will surely change the e-commerce ecosystem in Asia, as they bring in new segments of consumers into the market and drive sales for e-commerce stores.
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