March 2016 | India
More Fintech companies are expected to join the bandwagon in this and next year
Financial technology companies have gain mileage over the last 5 years. Globally, the investment in online MSME finance market has grown by about 45% y-o-y and many billion dollars has been ploughed into startups in the online MSME finance market space in FY’2015 alone. With the influx of investment, finance and banking are being transformed by innovations such as peer-to-peer models, crowd funding, and contactless payments. At the global level, these changes have been driven not by established financial players, but by startups including now-huge players such as LendingClub, Kickstarter, and Funding Circle. The Indian market also comprises of players such as Faircent, iLend, Lendbox and Loanmeet.
In India, a new generation of startups is taking shape in the financial sector from payments to wealth management to peer-to-peer lending to crowdfunding. These startups want to revolutionize the entire financial system in India and improve the quality of financial services. Online MSME finance market startups are looking forward to changing the way traditional financial system works in the country and aims to offer better deals to the borrowers and lenders who congregate on their platform.
These online MSME finance service providers are increasingly gaining legitimacy even with regulators. The RBI is considering the role played by online MSME finance service providers in availing MMSE finance and framing policies to accommodate the peer-to-peer model such as Faircent in the existing financial system. After such a move by the RBI, it is expected that online MSME finance service providers will also gain trust from investors and borrowers.
Despite of having relatively higher interest rates of 16-21%, small scale borrowers have preferred to opt for online mode of MSME financing due to ease of use and fast processing of loans. Moreover, since the interest amount in the PTP model used in online finance is lower in comparison to local money lenders, more small business owners have resorted to the usage of online platforms. Additionally, it has been observed that in case of presence of strong credentials of borrowers, the costs can be lowered by more than 10 times.
The latest market research report titled “India MSME Finance Market Outlook to 2020 – Driven by Government’s Financial Inclusion Agenda and Newfound Profitability in Segment” by Ken Research provides a insightful analysis of the MSME Finance Market in India and covers various aspects such as market size of MSME finance market, demand-supply gap in MSME Finance and market share of various financial institutions. The report also provides competitive landscape and profile of major players operating in India’s MSME Finance Market. The future analysis of overall MSME market has also been discussed in each of the sub segment under base case scenario, aggressive case scenario and conservative case scenario. The report is useful for various banking and non-banking financial institutions including new entrants operating in or planning to enter the market to align their market centric strategies according to ongoing and expected trends in the future.
Key Topics Covered in the Report:
– MSME Finance Market Size by Outstanding Credit and New Loan Disbursed
- Market Segmentation by
o Size of Enterprise
o Source of Finance (Formal and Informal)
o Registered and Unregistered
o Manufacturing and Service Enterprises
o Formal and Informal Source
o Form of Finance
o Regional Credit Distribution
- Value Chain for MSME Finance Market from the perspective of
o Financial Institution
- Competition and Market Share
o Public sector Banks
o Private Sector Banks
o Micro Finance Institutions (MFIs)
- Trends and Development
- Growth Drivers and Challenges
- Snapshot of India Online MSE Finance Providers
- Working Models and Revenue Models of Financial Technology companies
o Capital Float
- Future Outlook using scenario analysis, projecting the future growth considering
o Base Case Scenario
o Conservative Case Scenario
o Aggressive Case Scenario
- Macro Economic Parameters
- Analyst recommendations
Major Players Covered in the Report
- State Bank of India
- Punjab National Bank
- Bank of Baroda
- Canara Bank
- Bank of India
Non Bank Financial Institutions (NBFCs)
- Bajaj Finserv Ltd.
- Religare Finvest Limited
- Reliance Capital
- Intec Capital
Micro Financial Institutions (MFIs)
- Bandhan Financial Services
- SKS Microfinance
- Janalakshmi Financial Services
- Ujjivan Financial Services
- Equitas Microfinance pvt Ltd.
Financial Technology Companies (Fintechs)
- Capital Float
- Indifi Technologies