Medical expenses and consumer durable purchases topped the chart for reasons why millennial availed digital loans all through 2019, according to a 2019 report on the millennials key borrowing and spending habits, released by digital lending company CASHe. They were closely followed by loan foreclosure and holidays, it said.
CASHe, who specifically caters to the millennial segment of the population, undertakes customer data analysis on an annual basis. ‘The 2019 Millennial Loan-o-Nomics' report analyzed data of an active pool of over 400,000 loan application received from customers outlining multiple data points and key insights showcasing the typical consumption patterns, buying behavior and borrowing habits of millennial across India.
Small, personal loans are tailored to meet the present millennials needs who are faced with obstacles of expensive accommodation, higher education and travel. Often saddled with the repayment of hefty EMIs the moment they land their first job, digital lending with shorter lock-in periods is a saviour for especially for those with inadequate of zero credit history. Emergencies, like unforeseen medical expenses, are thus the reason why 37 percent of millennial customers resorted to lending - a sharp increase from 31 percent last year.
Averse to the manner in which millennial are being perceived, the CASHe data clearly outlines the purpose of borrowing among millennial being need-oriented rather than redundant. While 'emergencies' accounted for approximately 57 percent of the borrowing, 'aspirations' accounted for 43 percent.
Surprisingly, only 10 percent of borrowers are women, reflecting the ratio of male to female application ratio on CASHe app. Hyderabad soars ahead in terms of millennial credit demand compared to last year, ranking second after Bengaluru. Older millennials, between the ages of 31-38 accounted for about 52 percent of the loans taken, while the millennial cohort earning in the 25k-50k category presented the highest number of borrowers at 43 percent, succeeded by those in the 15k-25k monthly income bracket at 36 percent.
The data showcased that '71 days' is the average frequency of repeat loans, while 73 percent of the applicants are repeat users. In terms of loan size, a majority of them (27 percent) preferred small ticket loans of under Rs. 10,000 and the data indicated a significant credit demand from near-prime millennial accounting for approximately 55 percent. This reinforces the idea that millennials are actually quite financially disciplined - repaying loans on time and dispelling their image of being irresponsible spendthrifts.
Considered the most tech-savvy of the current generations, the customer analysis also revealed that millennials rely heavily of technology for communication. Thus, UPI and NEFT topped as the most preferred medium of repayment.
CASHe CEO, Ketal Patel said, "The Indian banking infrastructure has not evolved enough to include the gamut of needs by this emerging section of the population and this is where new-age digital lending companies like CASHe step in - an industry estimated to touch USD 100 billion by 2023. Representing the 'chief wage earners' and the largest demographic cluster of the country, millennials are redefining the Indian consumer story and thus have the potential to deliver the country from the current economic upheaval. It is therefore essential to create an ecosystem that matches their needs, while driving initiatives to bridge the gap between male and female borrowing, in order to truly create a financially inclusive economy" he further added.”