EMI Cards Emerge as the popular mode of Consumer Choice : Home Credit India’s How India Borrows 2022 Study

By Kalinga Voice Last updated Dec 20, 2022

Over 50% borrowers have shown preference for EMI-Cards for shopping or taking credit, followed by credit cards (25%), and new-age lending platforms including BNPL (Below 10%)
Similarly, 60% borrowers having surveyed have shown interest for ‘embedded finance’ where
e-commerce shoppers can convert purchases directly to EMIs
One-third borrowers, led by Tier 1 & 2 cities, have shown trust and familiarity towards chatbots
40% borrowers, led by tier 1 & 2 cities, are willing to initiate loan application through WhatsApp in near future
Three-fourth borrowers are optimistic about digital lending services; owing to rising popularity of online loans, convenience, and faster adoption of digital lending

New Delhi: Home Credit India, a local arm of the leading global consumer finance provider, released its annual consumer study – How India Borrows (HIB) 2022 study today. The HIB 2022 study concludes that more than 50% of the borrowers surveyed show preference & acceptability for EMI Cards when it comes to shopping or for any credit need. Overall, more than three-fourth of the borrowers led by Tier 1 & 2 cities and Gen Z/Millennials are optimistic and buoyant about digital lending services, owing to rising popularity of online loans, convenience experienced, and faster adoption of digital lending.

The HIB study is aimed at understanding the rapidly evolving consumer borrowing behaviour, as the economy undergoes digital transformation in post-Covid world. The study was conducted across 16 cities including Delhi-NCR, Mumbai, Kolkata, Bengaluru, Hyderabad, Bhopal, Patna, Ranchi, Ahmedabad, Chandigarh, Chennai, Dehradun, Jaipur, Lucknow, Ludhiana, and Pune. The sample size is approx 1500 borrowers (Home Credit customers) in the age group of 18-55 years, with an average income of Rs. 30,000 per month.

The HIB 2022 shows the positive consumer borrowing trend that was the highlight of 2021 study is going strong this year too irrespective of the macroeconomic headwinds, with 75% borrowers taken credit to buy consumer durables, home appliances, home renovation and business purposes. Owing to buoyant sentiments, more than 50% borrowers showed preference for EMI-Cards when it came to shopping or taking credit, followed by credit cards (25%), with new-age lending platforms including ‘Buy Now, Pay Later’ evidently losing out with less than 10% in favour. Borrowers view EMI Cards as trustworthy, with timely approvals & quick disbursals.

Similarly, 60% borrowers primarily Millennials/GenZ from Tier 1 & 2 cities (led by Bengaluru at 82%, Patna 74%, Lucknow 69%, Ludhiana 68% and Jaipur 68%) have shown interest in ‘embedded finance’, where
e-commerce shopping can be converted to EMIs for affordable financing. Most of them believe embedded finance makes borrowing faster and ecommerce shopping easier.

Another major positive is the growing embrace towards digitalisation of financial services. The HIB study states after showing affinity towards online loan journey last year, this time 40% borrowers led by Tier 1 & 2 cities (Jaipur at 55%, Pune 48%, Ludhiana 47%, Lucknow 44%, Chandigarh 43%) have shown willingness to initiate loan application through WhatsApp chat in coming time. Chatbots too are not far behind in tech-enabled financial services race, with one-third borrowers, led by Tier 1 & 2 cities (Ahmedabad at 54%, Lucknow 45%, Patna 44%, Jaipur 42%) shown trust & familiarity towards chatbots, a 13-point uptick from FY21. The adaptability towards online loan journey is also growing as over 50% borrowers show affinity towards online loans, a 14-point increase from FY 21. On same lines, borrowers have largely shown their comfort with mobile banking viz-a-viz Internet banking, especially in Tier 1 & Metros (Pune at 75%, Bengaluru 69%, Delhi-NCR 64%, Ludhiana 63%, Ahmedabad 62%, Mumbai 58%, with Bhopal lowest at 42%)

Speaking on the consumer study, Mr. Ashish Tiwari, Chief Marketing Officer, Home Credit India, said, “The big take away of this year’s How India Borrows study is the digital evolution of consumer credit in India, which is being driven by GenZ/Milennials from Tier 1 & 2 cities. The key borrowing trends point to the emergence of Embedded Finance phenomena leading to the popularity of EMI financing. The new-age consumers are now not averse to going for loans or credit especially small-ticket size to fulfill aspirations and live their life to fullest. Along with it, they are fast embracing new digital tools or platforms to ensure access to affordable and convenient credit. As most borrowers are optimistic about the future of digital lending services, they are also aware of its pitfalls and so, want to become financial literate.”

Financial Literacy is fast becoming a serious topic of concern & discussion amongst evolving borrowers in post-pandemic world. The study shows 40% borrowers across demographics and regions want to attain financial education including personal finance from reputed organizations, driven by Tier 1 & 2 cities. With Bengaluru, Hyderabad and Ludhiana leading, Jaipur, Ranchi and Pune to follow.

On a region-wise outlook, the north, east, west and south have their own characteristics. North India region has shown resonance with initiating loan applications on WhatsApp chat and online loan journey. East India has shown its affinity strongly towards online shopping, trust in chatbots and having financial service apps on smartphone. West India has inclination towards mobile banking and initiating loan applications on WhatsApp chat. And South India is interested in financial literacy and embedded finance.

Respondents interviewed during the research also highlighted that with some handholding and guidance on financial and digital literacy, will ensure their loan journey is completed hassle free and independently.