At a period of time when the Covid-19 epidemic has accelerated digital adoption, the killing of startups in the fintech space is disrupting financial services and the banking industry.
Alibaba and SoftBank backed by financial services launched Paytm have launched ‘Instant Personal Loans’ on its platform to facilitate access to credit services for individuals. This service is available 24X7, year-round, and even on public holidays and weekends. Paytm is a technology and distribution partner for NBFC (non-bank financial companies). It will help them increase access to and acceptance of loan services for leading people, small businesses and professionals.
Loans will be processed and disbursed by NBFCs and banks. The move will bring ‘new borrowers’ customers to the status of a legitimate financial market. It will also empower people from small towns and cities who do not have access to traditional banking institutions.
“We aim to make Instant Personal Loans available to the self-employed, new to lenders and new working professionals who need short- to medium-term loans to manage emergency expenses,” said Bhavesh Gupta, CEO, Paytm Lending. “We will continue to develop and deploy more computer-based resources that help bring ‘new users’ who will be ‘grateful’ to the formal economy.”
Paytm has digitized the whole process of applying for a loan and withdrawing it without any documentation. This unique service proposal is built on a Paytm shortcut technology platform that enables banks and NBFCs to process loans within 2 minutes. There is a payout period of 18-36 months and EMI (estimated monthly instalment) is appropriately determined. During the beta phase, Paytm has issued a personal loan to more than 400 selected customers. The company now aims for more than 1 million users by the end of the financial year to access personal loan services from the platform. Paytm offers fast loans of up to Rs 2 lakh to earners, small business owners and professionals.
Paytm is estimated at $ 16 billion. It has raised a total of $ 3.5 billion in funding from investors including Alibaba, SoftBank and Berkshire Hathaway billionaire investor Warren Buffett.
Paytm’s rival, which supports Walmart, PhonePe has launched ‘Them Life Insurance’ on its platform, in partnership with Private Prudential Life Insurance Co Ltd. With the launch, PhonePe said millions of its users could now protect their families from the financial crisis in the event of premature death. Premiums start from the ground up to Rs 149 per year. This policy can be quickly accessed in the PhonePe app without medical examinations and papers using digital customer information.
Indians have only 2.73 percent coverage of insurance. Lack of awareness, confusion about many paperwork and very little experience with the suffering of medical examinations, have been the main causes of this problem. This is especially true of Indians in two or more large cities. PhonePe with more than 250 million users aims to improve awareness and access to long-term life insurance products and resolve this broader industry issue.
“Insurance as a product is often excluded in India especially in the geographical areas, ages and income groups that they need the most,” said Gunjan Ghai, vice president and head of insurance at FonePe. “The prohibited costs of awareness and the costs and efforts to distribute the product of the relevant ticket period insurance are the ones that deal with this matter.”
All PhonePe users aged 18 to 50 and earning Rs 1 lakh a year or more can access this policy immediately on the platform. In addition, without the hassle of standard medical examinations, and with zero paper, this policy guarantees the user an amount ranging from Rs 1 lakh to Rs 20 lakhs, depending on the premium price. It can be renewed effortlessly at the expiration of the PhonePe app.
PhonePe is raising $ 700 million in the capital with a payroll after $ 5.5 billion from existing Flipkart investors including Tiger Global, led by Walmart.
Another fintech company BharatPe is preparing to become a popular bank for small retailers and offers the entire portfolio of banking services. The products that you plan to launch in the next 12-24 months will be in line with this vision. BharatPe plans to raise more than Rs 5,000 million in debt over the next two years to build its lending business.
Experts say that ‘financial services’ are becoming the next major battlefield for technology players like FoniPe, Amazon, Google and Paytm. They are looking at the Indian financial services market, which could affect about $ 340 billion in the next few years.
Infographics:
1. Paytm:
- 1 million, Paytm customer value for providing instant cash loan using technology.
- For 2 minutes, it can take users to secure 24X7 loans, 365 days a year.
- Rs 2 lakh, a quick loan offered by Paytm to income earners and small business owners.
2. PhonePe:
- 250 million, based on PhonePe base that the company intends to offer Term Life Insurance.
- For 18 to 50 years, a user age group can access this policy quickly.
- $ 340 billion, a financial services market in India over the next few years.
