60% borrowers worry about lending apps collecting their personal data, shows Home Credit’s latest survey

Reflecting people’s overall comfort with internet-related tasks, only 13 percent said they sought help from others for net banking, payment wallets, shopping, etc.

In this age where everything from groceries and gadgets to loans and insurance is being bought online, we end up sharing a lot of our personal information with online merchants and service providers. So it’s no wonder that 60 percent of borrowers surveyed by Home Credit India Finance (Home Credit) were worried about lending apps collecting and using their personal data.

That 65 percent of the respondents indicated a lack of awareness about the data privacy guidelines being implemented by lending apps perhaps contributed to this worry. Only 18 percent said they had heard of the guidelines and also understood them fully (see graphic). It was in September 2022 that the Reserve Bank of India (RBI) issued digital lending guidelines laying out in great detail how digital lending apps must collect, store, use and share customer data.

These along with other findings form part of the How India Borrows Report 2023 by Home Credit, the Indian arm of Home Credit International, an international consumer finance provider. For this study, 1,842 borrowers with an average age of 34 years and an average income of Rs. 31,000 per month were surveyed across 17 Indian cities.

Those residing in the smaller cities appear to be the most worried about their data being collected and used by lending apps. Compared to 30 percent of those from the Metros, 48 percent of those from Tier-2 cities are bothered by this. City-wise, Kochi, Dehradun and Jaipur lead among the worried lot. Also, overall a larger percentage of women rather than men are concerned about this matter (see graphic).

To the question, 'I understand how my personal data is used by the loan companies', just under one-fourth of those surveyed responded with a yes. But, there was a wide variation on this across the 17 cities – from as low as 2 percent in Kochi and 13 percent in Bengaluru and Ludhiana, to 34 percent in Chandigarh and 76 percent in Chennai.

So, what were people taking loans for in 2023?

According to the survey, 44 percent of the respondents took a loan for purchasing consumer durables such as smartphones and home appliances. Another 19 percent borrowed for starting or expanding their business. Interestingly, while only 3 percent took a loan for purchasing a property (home loan), 12 percent borrowed for house construction or renovation (see graphic).

In terms of the loan disbursal channel, bank/point of sale (POS) still accounted for 52 percent of the loans in 2023. Online loans and loans over a customer care call involving no face-to-face interaction accounted for another 29 percent and 19 percent, respectively.

For cities such as Chennai, Kolkata and Bengaluru, online was the biggest loan disbursal channel. On the other hand, for others such as Ranchi, Jaipur and Mumbai, bank/ POS was the leading channel. In fact, 99 percent of the loans taken in Kochi were via the POS/ bank route.

As regards applying for a loan, 51 percent of those surveyed did this via a mobile application and without making a visit to any lender.

When it came to shopping, 48 percent said they preferred to shop online. Expectedly, the percentage of such individuals goes up as the age group gets younger. For example, 63 percent of Gen Z or those aged 18-24 years said they favoured online shopping. (see graphic for city-wise details)

Of those surveyed, 44 percent said they used internet banking and 54 percent said they used mobile banking. Here too, Gen Z led the pack — with 54 percent and 62 percent of them being net banking and mobile banking users, respectively (see graphic for city-wise details).

Finally, reflecting people’s overall comfort with internet-related tasks, only 13 percent said they sought help from others for net banking, payment wallets, shopping, etc. But compared to only 9 percent of Gen Z relying on such help, 23 percent of Gen X (those aged 40-55 years) required assistance with their online tasks.