Digitalisation in India Will Grow in 2025 Due to the Activity of Middle-Aged and Senior Users

The report by Robocash Group reveals that by 2025, 66% of the increase in the number of Internet users will be attributed mainly to the middle-aged and elderly population. The shares of young adults and middle-aged generations will become roughly equal, resulting in an equivalent impact on fintech.

The young adults and adults (18-34 y.o) in India comprise the largest share (35%) of all Internet users. However, despite the growth in absolute numbers, the age group of young adults has lost almost 20 p.p. of the share for the period from 2013 to 2019 due to the faster growth of other generations.
According to the Robocash Group’s forecast, the share of young adult Internet users will continue to decline, compared to the middle-aged generation (35-54 y.o). The share of the teenage population group will not grow as quickly in the future, resulting in the 3.4 p.p. loss in the coming years. 

Due to government programs and the necessity to use online services, the middle-aged and elderly population will begin actively using the Internet at faster rates. Therefore, by 2025 we can expect an increase in the share of the middle-aged by 32%, and in the elderly generation (55+ y.o.) up to 12.0%.

Thus, 94 million and 62 million from the middle-aged and elderly age groups respectively are forecasted to become Internet users by 2025. This will lead to a shift in the age breakdown structure, as the prevailing share will then belong to the middle-aged people. The shares of the young adults and middle-aged Internet users will become roughly equal, thereby having equivalent potential and influence on fintech services.

Robocash Group’s analysts comment that this change in the structure of Internet users will have a direct impact on the fintech industry, increasing the significance of the middle-aged and elderly population as a target audience. 11% of middle-aged and 14% of seniors will almost certainly start using fintechs frequently or consistently. In this regard, fintech companies will presumably turn to online education and training of the middle-aged and elderly generations in order to expand the target audience.

The report analyses digitalisation in India broken down by four main age groups:1. Teenagers – 12-17 years old; 2. Young adults-Adults – 18-34 years old; 3. Middle-aged – 35-54 years old; 4. Elderly – 55 years old and older.

Robocash Group is a group of companies, which provides fintech services in Asia and Europe. Founded by entrepreneur Sergey Sedov in 2013, the group focuses on providing modern finance solutions for the underserved by the traditional banking system. All products of the group are built completely in-house using artificial intelligence, machine learning and data-driven technologies to provide precise and comprehensive risk management, comfort and speed for customers and efficiency for business. For the time of operation, the group has gained more than 19 million customers and provided financing in the amount of 1.6 billion USD.

Happiness and Online Loans in APAC have Strong Direct Correlation of 0.6

Studying the impact of online consumer lending on the happiness of the population in Asia Pacific (APAC), analysts of Robocash Group found a strong direct correlation between them.  In other words, happier countries see higher popularity of online loans. At the same time, access to online lending helps people feel happier.

To show the impact of online consumer lending on the happiness of the population across the world and Asia Pacific, in particular, analysts of the company compared the data of the World Happiness Report by the Earth Institute with the number of search queries "loan" and "online loan" according to Google Ads. The significance of the relationship ranges from -1 to 1, where “-1” means strong negative linear correlation, “1” - strong positive linear correlation, “0” - no correlation.

General correlation of consumer credit to GDP to the happiness ranking globally shows that a higher level of happiness in a country results in the more widespread consumer lending. At the same time, an overview of countries in APAC has revealed an average direct relationship – 0.502. As a rule, markets ranked high in terms of happiness have stable economies and high incomes among the population. It unfolds the positive effect of lending in full, and the credit load does not make people less happy.

Meanwhile, developing markets see a lower share of bank consumer loans that are less significant for local people. Then, the heterogeneity of the economic development, geography and social factors in APAC plays its role too. As a result, the relationship between happiness and the volume of consumer loans in the region bears an exponential character.

However, the lower usage of consumer loans does not mean low demand for credit in Asia at all. This is mostly due to the significant share of the unbanked and underbanked as well as informal employment. For instance, in 2019, the latter amounted to 30% in Europe, while Indonesia had 75%. Altogether it draws the population to non-bank lending. Thus, 40% of adult Filipinos borrowed from relatives and friends in 2017, while only 10.7% applied to financial institutions or used credit cards. At the same time, online solutions are rapidly expanding driven by the geographical specifics and the digital adoption, but the market often stays out of the official statistics.

Moreover, an analysis of the interest for online loans across APAC reveals a strong direct correlation (0.6) between the happiness level and the number of search queries per 1,000 people. Indonesia and Vietnam stand out with the popularity of online financing tools amid insufficient banking inclusion. Another example is India, which is 10^th from the bottom in the happiness ranking. At the same time, the number of queries there is 5.3 that is close to the result in Japan and exceeds the regional trend. The reason is state initiatives, such as AADHAAR, empowering the unbanked population to access online financing more freely.

Overall, there is a strong direct correlation, which suggests that happier countries in APAC observe higher demand for online loans. And the other way round, online loans help the local population feel happier. Partially taking on the tasks usually performed by traditional bank loans, online lending helps people afford things inaccessible under normal conditions. Sure, it mostly goes about small amounts common for the industry that keep the negative impact of credit burden rather low.

Robocash Group is an international financial group operating in the segments of consumer alternative lending and marketplace funding in Europe and Asia. The company develops robotic financial services providing micro consumer lending to customers in Russia, Kazakhstan, Spain, Indonesia, Vietnam and India and operates its own EU-based P2P investment platform. The group develops products completely in-house using artificial intelligence, machine learning and data-driven technologies to provide precise and comprehensive risk management, comfort and speed for customers and efficiency for business.

Post Covid-19: Non-bank Lending will Grow in Asia

The COVID-19 pandemic has significantly changed the psychology of average borrowers. One of the near-time effects will be the growth of non-bank lending. According to a customer survey of Robocash Group in Asia, 50% of respondents say about a higher need for financing. Moreover, the decrease in incomes during quarantine has prepared 45% for active borrowing when restrictions are lifted. At the same time, the other 9% will be motivated by the desire to satisfy their hunger for consumption.

To assess the psychological impact of the pandemic on the future credit activity of borrowers, company analysts identified nine main factors evaluating their positive and negative influence on a 5-point scale. Besides, the results of online customer surveys in the Philippines, Indonesia, Vietnam and India were taken into account.

On the background of the increased need for financing amid the pandemic due to various reasons among half of the respondents, one in four (28%) faced a real drop in income. The decline in financial wealth of the population became the main factor, which reduced the demand for all types of loans during the active phase of the quarantine. Other factors such as overall insecurity and anxiety, established habits to keep social distance and cut down on expenses have strengthened it. The effect will be long-term. Combined with tightened scoring requirements, it will also prevent a sharp surge in lending after the removal of restrictions.

However, the broader usage of digital services with the growing deferred consumption will still gradually prevail over the habits to social isolation and lower spending. The survey results confirm it. An increase in the volume of deferred expenses and the need for money has become stressful for many people. Thus, it will encourage 45% of respondents to borrow more in the post-COVID-19 period. Then, 9% of the surveyed are more likely to resume borrowing because they miss the usual spending.

Analysts of the company added: “Coronavirus has only expedited the expansion of digital and Internet services, boosting the demand for apps providing remote communications, video streaming, online shopping, etc. It has produced a solid base for the further penetration of non-cash payments and fintech.”

Although a far more complex set of factors will affect the outcome such as government policies, the state of alternative lending, the adaptation of traditional banks to the changes etc, psychological and related points allow predicting an increase in volumes for non-bank lending after the complete removal of restrictions. As the findings show, it won't be sharp but steady.

50% Indians will Make 5 and more E-Payment Weekly during 2021 in Contrast to 17% Last Year

According to analysts of Robocash Group, more than half of Indians will make five and more e-payment weekly during 2021 in contrast to 17% in 2019. At the same time, the share of unsecured consumer loans issued online will approach 50%.

Social distancing has caused a shift in consumption patterns and accelerated the adoption of digital services and payments by businesses and customers. Due to the rapid development of digital payments and alternative lending recently, India serves as a strong example.

The World Bank states that only 29% of the local population made or received digital payments in 2017. A survey conducted by Robocash Group in early 2020 showed a remarkable dynamic. Thus, 71% of the company's customers made e-payments last year. However, the frequency was rather low: only 17% conducted five and more digital payments weekly. This is close to the results in Southeast Asian countries: the Philippines - 13%,  Indonesia - 16%, Vietnam - 23%. As for online lending, only 28% of respondents in India took their first loans in 2019 remotely.



To sum up, habits formed during COVID-19 pandemic and social distancing will contribute to the continued expansion of digital payments and lending. Moreover, speeding up the transfer of funds, reducing the weight of the informal economy and increasing tax inflows to the budget, it can add up to 0.5% to GDP growth in the countries of South-East Asia in 2022-2025.

Robocash Group is an international financial group operating in the segments of consumer alternative lending and marketplace funding in Europe and Asia. The company develops robotic financial services providing micro consumer lending to customers in Russia, Kazakhstan, Spain, Philippines, Indonesia, Vietnam and India and operates its own EU-based P2P investment platform. The group develops products completely in-house using artificial intelligence, machine learning and data-driven technologies to provide precise and comprehensive risk management, comfort and speed for customers and efficiency for business.

5G will Boost Financial Inclusion in Emerging Markets in Asia

Driving improvements in the digital space, 5G has accelerated financial inclusion in emerging markets in Asia. Analysts of the financial holding Robocash Group forecast that with its help, about 3 million of the unbanked and underbanked will get access to financial services in both Vietnam and the Philippines by 2025. Indonesia will have 9-11 million, and India – 60 million.

Smartphone penetration rising in APAC annually by 10.8% on average is one of the main drivers for the commercial adoption of 5G. The extensive adoption of mobile phones and Internet penetration stimulates the progress of Asia in this field. Statista reports that, with an increase in the number of smartphone users in Indonesia to 89.9 million by 2022, the penetration rate will grow from 26% in 2018 to 33% in 2023. In Vietnam, the share of smartphone users will rise from 34% in 2018 to 40% by 2021. The Philippines are predicted to show the same rate (40%), up from 32% in 2018. India may expect to have 36% of smartphone users in the country by 2022, i.e. 10% more than in 2018.

With insufficient access to banks among the population, advanced mobile solutions and digital background have facilitated the development of alternative lending across the region. Thus, according to the report by Cambridge Centre for Alternative Finance, South-East Asia had the highest overall volume of $2.19 billion within the online alternative finance market in APAC (excluding China) in 2018.

At the same time, with the active use of 5G in the development of the Internet of things, the unbanked and underbanked are expected to see even more opportunities. The new layer of information on them can become a significant addition to the existing alternative data sources and machine learning methods. As a result, the efficiency of scoring of such customers will improve too. Company analysts think that the expansion of 5G itself can add 5% on average to an annual increase in disbursements in macro-regional alternative lending.

Education and Health, Household Appliances and Business Needs made Indians Borrow Most Often in 2019

Online lending and microfinance have become a multipurpose solution for customers in Asia. These are the findings of an online survey conducted by Robocash Group in the region earlier this year. Remarkably, men and women apply with different needs in mind. However, already 35% of all respondents in India put the online segment in priority.

In 2019, the most significant share of women (42%) applied for a loan because of business needs. However, it does not mean active female entrepreneurship. It rather indicates a high degree of informal employment associated with running a small family business. Other frequent female answers embraced family categories. Thus, expenditures on children and education or medical services shared second and third places with 25% of responses.

As for men, they took loans to pay for education and medical services most often (40%). Second place with 26% of responses in 2019 belongs to the purchase of household appliances and electronics and other durable goods. In general, men in India demonstrate high involvement in managing financial issues. As a result, they are also more active as consumers. According to the own statistics of Robocash Group in India in 2019, 88% of applicants for short-term online loans were men.

Overall, the results of the survey also conducted in Indonesia, Vietnam and the Philippines show that education and medical services, purchase of electronics and household appliances, and business needs make up the three most common groups of responses.

Remarkably, men took loans to pay for prestigious items more often than women did - 13% and 6%, respectively. A significant share within it belongs to the purchase of smartphones driving the growth of the Internet economy in developing Asian countries. Besides, men often buy gadgets and other goods in this category, such as jewellery and fashionable clothes, for their family members too.

The least common reasons to borrow among Asian women were big purchases such as real estate or vehicles (3%), expenditures on events (3%), small impulse buys (3%), and vacations (1%). Expenses on special occasions turned out to be a male prerogative: 10% took loans to afford vacations, 9% other events.

According to analysts, the outbreak of Covid-19 has undoubtedly affected the purpose of loans and brought essential needs to the forefront. As soon as countries remove restrictions, customers will also gradually recover their consumption activity. Meantime, social distancing has highlighted the significance of the online segment too. It allows the industry to expect an increase in the share of customers who prefer online services from the current rate of 57% across the region.

Robocash Group is an international financial group operating in the segments of consumer alternative lending and marketplace funding in Europe and Asia. The company develops robotic financial services providing micro consumer lending to customers in Russia, Kazakhstan, Spain, Indonesia, Vietnam and India and operates its own EU-based P2P investment platform. The group develops products completely in-house using artificial intelligence, machine learning and data-driven technologies to provide precise and comprehensive risk management, comfort and speed for customers and efficiency for business.

India among 5 Nations having Best Prospects for Online Micro Consumer Lending

According to the analysts of the financial holding Robocash Group who made a corporate ranking of countries in South and Southeast Asia, Laos, India, the Philippines, Myanmar and Vietnam have the highest prospects for the development of online micro consumer lending.

The highest score in the ranking (20) belongs to Laos. It combines a high potential of the untapped demand with a positive attitude to short-term online lending from the government and population. The need for relevant products in Laos is similar to the situation in Myanmar, but it is free from some obstacles of the latter. Over time, the new market will grow, and foreign investors may significantly contribute to this process. The underdevelopment of the legislation and the absence of financial institutes such as credit bureaus encourage experienced foreign companies with a fine-tuned scoring and reliable operation processes to support the efficient development of the market.

India holds second place with a score of 18. Despite a direct connection between the development level of a country and its place in the ranking, India is an exception. Although a significant part of local people already has access to credit products (79.9%), the rest include hundreds of millions of people. It correlates with the formed regulation. Besides, the market has a relatively small number of foreign companies, and not many Chinese startups have entered the market. As a result, the competition remains quite moderate.

Third place belongs to the Philippines (16). The country gives in the leading positions to other countries because of their hidden potential. However, other advantages compensate for it. The country has an established market of short-term lending services, flexible and facilitative regulation. Then, there is a balance between the high demand for relevant products and low debt load among the population. Moreover, the Philippine government is driving the digitization of financial services to decrease the factor of geographical fragmentation. It makes the country stand out on the regional background.

Myanmar is fourth in the ranking (14). As a country with a relatively large number of people below the poverty line and high demand for micro consumer loans, Myanmar stands out in comparison to the more developed countries in Southeast Asia. Still, some points are holding the market back. Partly, this is due to its underdevelopment. The government has introduced strong regulation to get rid off illegal creditors, which activities have led to debt overload of the population. The latter reduces the attractiveness of the country for foreign companies significantly.

Fifth place belongs to Vietnam (12). Vietnam demonstrates significant demand for micro consumer online loans. With a large number of people living in rural areas (66%), only one-third of the population has access to credit products. Another stimulating factor is the growing GDP forecasted to increase by 6.6% by 2020. Still, Vietnam should improve its regulation in terms of licensing of companies and control of financial statements. Overall, the country represents a bright example of the market with a medium position in the ranking. Vietnam is quite perspective but gives in the leadership due to the current difficulties for the business.



Methodology:
To rank the countries by their prospects for the development of micro consumer online lending, the estimate took into account the information about GDP, population and its access to financial services, regulation requirements and some other additional factors.

Almost 70% of Indian Online Borrowers Save Money for Family Plans - Report

A customer survey conducted by the international alternative lending holding Robocash Group in India has shown that 69.4% of its Indian customers are currently saving money for different purposes. Long-term plans stay in priority for 56.1% of respondents. Particularly, 42.7% save funds for a house, 7% save money to buy a vehicle and 6.4% do it to pay for education. These are the most common answers.

At the same time, most respondents claimed that online loans help to pay for daily needs (40.8%) including food, transport fare and other necessary expenses. Regular monthly bills for housing and utility services, rent, mobile and internet services, TV etc. follow with 18.5%.



Analysts of the company find that although these tendencies might seem mutually exclusive, they complement one another. Small online loans serve as an efficient tool designed to cover a short-term gap in a family budget. Most often, it helps to decrease troubles caused by the difference in salary dates and expenses schedule. At the same time, this tool doesn’t hurdle strategic financial planning. Saving money using a bank deposit or other tools means long-term money work. Taking those funds out of savings may cause much higher expenses than the cost of a small amount of debt.

The findings on the structure of monthly expenses among Indians prove it by the close correlation of the most frequent expenditures with the common purpose of short-term online loans. For 33.5% of respondents, housing, utility services and rent make the most of monthly expenses. Food takes second place with 14.6%. These payments cause short-term gaps in a personal budget most often. Another remarkable point listed as regular expenditures among Indians is the financial support to relatives (9.5%). It distinguishes India from other Asian countries and emphasizes the strength of family ties.

Then, it is noteworthy that 30.6% of the respondents do not save at all: 22.3% of them mention having insufficient income as the main obstacle for it.