Bigger Brands Scaling Heights by Offering Lending Services

Reliance Jio’s new partnership with SBI’s digital platform seems to be quite fruitful. The partnership has taken place to support Reliance Jio to offer a shared network of services to the customers. It is an example of how companies with an enormous digital reach and technology base are tapping financial services to offer consumers all services on a platter with finances being in the last step.

This means that bigger brands are reaching scaling heights by introducing their own finances and payments arms and offering lending services.

On the other hand, this partnership is helping them to contain the consumers in their individual platforms be it in their e-commerce, telecommunication, retail or automotive segment. Also, lending has become an eye-catchy business opportunity in India through the process of low penetration of credit in India.

Alpesh Shah, a senior partner with Boston Consulting Group (BCG), who conducted a recent research on digital lending said, “We believe that non-traditional companies that have a strong brand, large consumer base as well as a strong distribution network will attack the lending market through innovative digital models.” The report also projects that digital lending will soon become a $1 trillion (approx Rs 68 trillion) opportunity in India over the next five years and it will be driven by these new age platforms.

The very fact that the government has taken a proposal in regulating the sector and has stepped in to provide the digital framework through the India Stack like Aadhar, eKYC, UPI, Digilocker and design services, etc. things are getting easier and more convenient. These facilities have democratized the lending sector, allowing multiple players with diverse offerings to compete on the same platform as financial giants, said Shah.

For example, a mobile maker company Xiaomi introduced Mi Credit incorporation with personal loan platform KreditBee, which in turn utilizes the e-KYC verification to generate instant loans of up to Rs 100,000. Xiaomi added this to the portfolio in addition to their over the top (OTT) music and video streaming services.

Likewise, e-commerce giant Flipkart is in anticipation of its NBFC license, which will allow the company to extend similar services to its 100 million consumer base as well as sellers, especially because no seller wants to lose customers at the last mile to “insufficient balance” concerns.