Two-wheeler lending: How Fintech is powering growth by ushering in a new era of customer convenience

Regarded as the largest producer and manufacturer of two-wheelers in the world, the Indian two-wheeler industry is still reeling under the impact of the COVID-19 pandemic, with the ensuing inflationary environment further impacting consumer demand. Compared with the pre-pandemic business condition, two-wheeler sales volumes have fallen by ~22 per cent and stood at 13.47 million for FY2021-22. However, the two-wheeler lending industry has grown by more than 20 per cent in the same period, led by non-banking financial companies (NBFCs) that account for 66.1 per cent of the total loans outstanding as on June 2022. With domestic two-wheeler sales volumes expected to recover to above pre-Covid levels in FY2022-23, financial technology (Fintech) enabled lenders are playing a crucial role in driving this resumption in domestic consumption. Utilizing new technologies and innovations in the financial services space, these Fintech lenders are revolutionizing how Indians are making two-wheeler purchases. Not only are they incorporating cutting edge features such as 24X7 WhatsApp-based inquiries, 100 per cent financing and flexible repayment and tenure options, but also supporting lakhs of previously unbanked Indians in accessing capital to fulfil their ambitions of owning a two-wheeler. As compared to traditional financial institutions, fintech lenders are employing technologies such as artificial intelligence (AI), robotization and other digitalization initiatives to offer app-based documentation processes that facilitates easier loan applications and fast track approvals. By deploying complex algorithms, many fintech lenders are analyzing consumption patterns and calculating credit risk, to help consumers finance their two-wheeler purchases at the best loan terms and rates. Additionally, these fintech lenders are incorporating digital payment platforms such as Google Pay and apps such as Amazon Pay to offer borrowers the convenience of repaying their loans at the click of a button. A stark departure from the long processing and approval times necessitated when opting for a traditional bank, a clutch of fintech lenders is making the process of purchasing a two wheeler a seamless and more convenient affair. With India’s rich demographic dividend expected to keep expanding till 2040 at least, the share of borrowers below the age of 35 in the total loan volume is expected to grow beyond the current 60% contribution in the years to come. Rising income levels in tier 2 and tier 3 cities and expansion in rural economic activity is also bringing in new consumers, for whom two wheelers are a convenient mode of transportation and an important lifeline. What’s more, with demand for micro mobility platforms like Rapido, Yulu and other start-ups witnessing strong growth in urban centres, fintech lenders could emerge as formidable alternatives to traditional banks and financial institutions, even for corporate and institutional financing requirements. Millennial and GenZ consumers, who are projected to make up nearly 60% of the working age population over the next two decades, are increasingly preferring fintech lenders on account of the flexibility and convenience they offer. The rapid growth of female borrowers, who are boosting demand for two wheelers while also having a better track record for making timely repayments, is another segment that fintech lenders are well-positioned to capitalize upon. As the two-wheeler industry marches on towards recording a full recovery, fintech lenders will benefit from these consumer segments that are open about their expectations and prefer to save on the time and effort involved in physical visits to traditional banks. It would be only fair to surmise that the two-wheeler fintech lending space will gain increasing market share on the back of its innovations and play a crucial role in empowering lakhs of Indians to make their first two-wheeler purchase. The author is Founder, Credit Wise Capital. Views expressed are personal. Read all the Latest News, Trending News, Cricket News, Bollywood News, India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.