Medical Expenses and EMI Financing are the top two reasons why millennial avail digital loans as per customer analysis undertaken by CASHe, India’s leading digital lending company for young salaried professionals. CASHe today put out multiple data points and key insights showcasing the typical consumption patterns, buying behaviour and borrowing habits pertaining to millennials across India basis a detailed analysis conducted on its active customer base of one lakh for the year 2018.
The findings reveal, young yet ambitious, the millennial generation enter adulthood with significant financial roadblocks such as lending for education, travel and outstation accommodation among others. With EMI’s scheduled to be paid off the moment they get their first job, digital lending characterised with smaller loans and shorter lock-in periods are coming to the aid of the millennial thereby effectively servicing their financial necessities. This makes it the second top reason with 23% of millennial customers resorting to lending. Whereas medical expenses which is another grave necessity tops the chart accounting for 31% customers as per the findings; which in the absence of digital lending platforms is usually serviced by the unorganised sector.
While millennial women have been perceived to be the most financially independent cohort, the findings made a startling revelation which states that; of its total just 9% are females. The gender classification data comes in the backdrop of the current phenomenon of “breaking the glass ceiling” everywhere with women working, establishing start-ups, working in jobs, buying their own houses, contributing in family income and so much more.
According to the findings, Bengaluru and Mumbai have been ranked as the top metros for millennial credit demand, followed by Hyderabad, Delhi, Chennai and Kolkata in that order. While in terms of segmentation of loan taken by monthly income, the 26k – 50k income range topped the list with 42% customers falling in the category which were closely followed by the 15k – 25k income range accounting for 41% customers. ‘60 days’ is the average frequency of repeat loans, while 70% of its customers are repeat users as per the findings.
Another key finding from the analysis we could gather was that an astounding 47% of credit demand from the millennials were from the near-prime category. These are the customers who would have most likely been deprived of credit from the lending institutions.
While the Indian millennial consumers do not particularly mimic their older generations yet most of them like to stay connected to their traditions such as celebrating Indian festivals and rituals with great fervour; which is why ‘October-November’ which is a festive season has been termed as the peak period when millennial take to lending. While shopping and travelling have been termed as the top indulgences for millennial during the October-November period, ‘Christmas’, ‘New Year’ and ‘Diwali’ are the top occasions when millennial availed digital loans.
Sharing his comments, Mr. Ketan Patel, CEO, CASHe, said, “Today’s young professionals have varied aspirations and their needs are not being addressed well by the current banking system. In-fact the Indian banking doesn’t recognise ‘short-term consumer lending’ as a viable sector owing to huge administration costs attached to short-term loans and the lack of credit history further dampens the situation. However, the young urban mass, owing to their educational and professional commitments do not prefer huge lock-in periods and hence small ticket loans for short term is of huge interest to them, making an average customer revisit 6-7 times a year. Owing to this we have witnessed, an average customer revisit of more than 6-7 times a year. With a millennial population of 400 million, India is well on track to becoming the youngest country in the world by 2020, hence there is an extensive gamut of financial needs and a whole cohort to build a banking eco-system of its own.”
With increasing financial inclusion, digital literacy, and data usage, short-term loans of 3-6-9 to 1 year loan tenure will fuel the next wave of borrowing with more first-time salaried borrowers who lack a credit history and hence cannot borrow from traditional platforms go online to fulfil their borrowing needs.