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Bhavin Patel

Bhavin Patel is Co-founder & CEO at LenDenClub.

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The P2P Lending Segment will Drive the Next Phase of Growth of the Indian Fintech industry

The regulation in the segment and expected growth opportunity will give rise to new players stepping into the industry. It is also expected to see various collaborations in the finance space and it is definitely

Technology is constantly undergoing a major shift with innovations in the field of Artificial Intelligence, Machine Learning, Cloud, Bot Technology, etc. Alternatively, government initiatives to promote digitalization and enhance financial inclusion in the country, have led to the growth of Fintech industry in India.  

Within the last 2-3 years, India has seen a major boost of its start-up ecosystem in the fintech space. Many new age companies have identified certain pain points in the finance sector and have set up a business plan to counter those problems with the use of technology.  

Amongst the multiple regulations introduced in the India's fintech ecosystem by Reserve Bank of India's (RBI) in 2017, recognition of P2P lending platforms as a new category of non-banking financial companies (NBFC) has been one of the most instrumental decisions towards the growth of this segment.  

With the much-awaited legitimacy, the sector is only at growth radar and trust in the segment is developing at a much faster pace. With more and more people moving towards online payments and transactions, the P2P lending space will witness a remarkable rise in the number of borrowers as well as investors. The growth will not only arrive from the urban India but also from Tier II and Tier III cities, leading the country towards the national goal of financial inclusion.  

Young entrepreneurs, women entrepreneurs and SMEs are largely on a hunt to explore financing option to establish their business and growth plans. The players in the P2P segment are yet majorly focusing on individual consumers and are aloof from this booming segment. However, they will soon exploit this segment, moving to the next phase of growth. Apart from the borrowers, the year 2018 will also see a rising interest from the investors’ fraternity. Being a high return investment model with limited downward risk, the segment may emerge as a lucrative investment asset class with big investors showing keen interest in this flourishing sector.  

The growth will also mean strengthening the technology and security systems adopted by the platforms. While the transactions are digital in nature and thus the data of every registered member is online, it becomes imperative for the players to adapt to stringent measures in order to safeguard the privacy of their customers. P2P lending platforms will now begin to adopt additional measures to ensure data security at all stages. Technology will also be enhanced constantly to minimise the user-interface, leading to a prolific mechanism.  

The regulation in the segment and expected growth opportunity will give rise to new players stepping into the industry. It is also expected to see various collaborations in the finance space and it is definitely

the right way to go about it. Traditional forms of businesses are now gearing up to realise the importance of technology and thus are engaging with most appropriate partners, in order to strengthen their services for the new age millennials. International P2P lending platforms will also explore entry into the Indian market through collaborations due to the country’s huge potential in this alternate financing segment.  

As predicted by NASSCOM, the Indian fintech space is expected to reach $2.4 billion by 2020, 2018 will act as a major contributor towards this direction. With government taking strong interest towards regulating and organising the sector, and also as Indian consumers finding banking convenience with innovation in technology, P2P lending segment is surely set to lead the growth of Indian Fintech industry.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house

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P2P Lending Segment Indian Fintech industry

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