Almost eight-month after Indian e-commerce behemoth Flipkart had announced its plan to get into the lending business, the Walmart-owned firm has now begun a pilot project to offer instant credit to customers.
As of now, Flipkart is doing digital KYC with about 10K customers. It is working on a video Know Your Customer (KYC) solution to offer the services.
From two-three weeks from now, it will start offering the service to more customers after getting required approvals from the RBI.
The Bengaluru-based firm claims to have got in-principal approval from the central bank.
Flipkart is using data points to give customer credit without even having a credit history, said Suyash Motarwar, Director Engineering at Flipkart, to ET.
The e-commerce firm claims to track around 1,000 data points to gauge a customer’s ability and intent to repay loans.
At present, its fintech partners are Kissht, which offers cardless EMIs to Flipkart customers, and ZestMoney, which offers EMI purchases during online transactions.
To drive credit adoption, it plans to work with partners and use shared data. So far, Flipkart has given loans to 1.2 million customers through its partners.
Last year, the Supreme Court has scrapped part of Aadhaar Act, which allowed private companies to use the unique ID for eKYC.
Meanwhile, in July 2018, the e-commerce firm had announced to foray into the lending space and had applied for an NBFC licence. In the following month, its rival had softly launched EMI through Amazon Pay to offer credit line up to Rs 60,000 to customers.
Almost a day after, Flipkart launched cardless credit programme akin to Amazon, offering an instant credit line of up to Rs 60,000 for consumers.
Both the e-commerce firms have been offering credit as a large base of their consumers don’t have access to the credit card. Meanwhile, it’s cumbersome to seek credit from banks and financial institutions.
Existing and several new firms are looking to strengthen their position in the lending market, which is said to grow larger in the coming years. The Indian digital lending market has the potential to become a $1 trillion market in five years, according to a BCG report.