Flipkart Will Start Off With Microlending And Microinsurance For Ecommerce Purchases On Its Platform
Flipkart is now looking to place its bet on the Indian fintech market which is said to be worth $2.4 Bn by 2020. In a recent development, the company applied for an NBFC (Non Banking Financial Company) licence to focus on consumer lending.
According to reports, the company will take a hybrid approach, looking to take a good chunk of the loan book while also creating a curated marketplace of lenders.
“About 60% of Flipkart’s over 100 Mn customers do not have access to credit, and the company is looking to close the gap by offering financial products to them as well as its sellers. Affordability products will be driven by the company’s own balance sheet for consumer financing, especially for people without access to credit,” Flipkart senior vice-president Ravi Garikipati said.
The company will start its fintech services with microlending and micro-insurance for ecommerce purchases on its website. It has a long-term plan of moving to products such as general and life insurance. It also plans to revive its seller financing and wants to be competitive in the SME lending segment. It must be noted that similar reports surfaced in November 2017 when it was speculated that Flipkart was looking to roll out insurance services on its platform.
At the same time, Flipkart will also push cardless credit, focused on the new-to-credit consumer segment, for which it has tied up with an NBFC. “The roadmap is to take consumer financing to other online ecosystem players after extending it to portfolio companies (Myntra and Jabong),” Garikipati said.
To strengthen its reach, the company is also looking to co-create new insurance products aligned with ecommerce, such as mobile protection insurance, including theft insurance and damage, and return shipping coverage for sellers.
Flipkart further expects its fintech products such as “buy now-pay later” and “cardless credit” to contribute to 15-20% of its growth over the next three years. Garikipati said that at present, the “buy now-pay later” product already has 6-8 lakh users, with a 60% repeat rate, and about 80 lakh Flipkart customers are eligible for it.
The company expects these fintech products to become a significant revenue generator as well as a profitability driver while it aims to address affordability for customers with credit products as well as other financial products such as insurance.
The online consumer lending space in India is overcrowded with several niche areas. Some of the major players in the space are LendingKart, Rubique etc. Recently, players such as OYE!Loans, MyLoanCare, Rubique, and Capital Float raised funds to support their aggressive growth plans.
The latest trend in the lending industry is 360-degree coverage of consumer needs with several products aligned in one portfolio. Players like Ola, Paytm, etc have already come up with a multi-product portfolio to keep their users engaged with several services on the same app.
[The development has been reported by ET.]