Google teamed up with TransUnion CIBIL (India’s largest credit bureau) to create a thought paper on emerging trends in India’s credit market and the changing behavior its retail borrowers.
As India’s consumer credit markets grew 18% to $613billion between 2017 and 2020 1, we observed several notable trends in both search and demand. There was an increase of the following queries in the second half 2020: “home loan”, “personal loan”, (+22%),” “car loan”, (+55%), “phone loan”, (+10%).2 In 2020 there were 2.5X as many credit checks for loan applications than 2017.
Marketers have five areas of opportunity in this rapidly growing market for retail credit:
1. At large volumes, small loans are possible
Many Indians are searching for small-ticket loans. Technology has made it possible to access them quickly, even though they used to be difficult to reach. The number of small personal loans, which are less than Rs. 25,000, was 23X greater between 2017 and 2020. The number of small personal loans — valued below Rs. 25,000 — was up 23X between 2017 and 2020.4 Also, we found that borrowers are loyal to the same lender. The number of small-ticket borrowers who borrowed from the same lender brand increased by 42X between 2017 and 2020. 6 These borrowers are driving up the market’s value and increasing its volume.
Data-driven tools are necessary for lenders to tap into this large-volume demand at scale. It can be used to help lenders determine what drives conversion.
Recommendation – Improve conversion using data-driven testing
Creditplus, a German-based loan provider, felt that a simpler, shorter mobile application form would improve its conversion rate. The team conducted an A/B testing through Google Optimize using its Ads campaign, directing traffic to the prototype form. The team could then create a great first experience and tweak the form over time.
Mobile conversion was 55% higher with the new form. The new form was implemented across all campaigns after tests revealed a 30% increase in desktop conversions. Creditplus was able without any upfront investment to identify what made the purchase experience better.
2. You can find high-quality borrowers outside big cities too.
Noting that Indian credit customers are also found in smaller and mid-sized areas, there is a huge opportunity for lenders. There has been a 5% shift in credit inquiries for retail loans to non-Tier 1 areas7, with the search interest for loans increasing 2.5X outside of large cities.8 Furthermore, almost 80% of demand from high-quality and prime credit seekers comes from outside Tier 1 cities. Lenders should pay more attention to India’s large cities if they want to capitalize on the increasing retail credit market.
Google is your friend!
Source: Google Internal Data. Google Internal Data is used to search for auto loans, home loans, and personal loans.Share
This trend is also evident in search results. We also see more searches in local languages because people are looking for credit information in smaller cities. There was a 24% rise in searches for “saal”, “loonnn”, and “loonnn”, respectively. Also, there was a 27% jump in searches for “hom lon ” (home loan calculator) and a 260% increase in searches for the “lghu Udyog lon (small-scale loan scheme).
Recommendation – For the best customer experience connect with your audience in their native language
India’s non-metropolitan areas have a high prevalence of regional languages. Marketers need to make sure they are thinking and speaking local. Policybazaar worked with Google to develop a local-language strategy for capturing the Hindi-speaking population for life and insurance. The campaign was an end-to–end vernacular campaign that focused on Search, Targeting, and Content Creation.
Policybazaar used automated translators to translate large volumes of English keywords into Hindi translations for Search ads. To improve localization, they used text-free images whenever possible. The brand’s call centers were specifically designed to reach the Hindi-speaking market. This campaign had a 11% higher click-rate from vernacular keywords than English campaigns and an 18% lower lead cost.
3. There are many niche marketing opportunities if you have the ability to manage the data
The new credit customer base is diverse. 71% are non-metros customers, 49% are younger than 30, and 24% of them are female. There are also large differences between product categories. For instance, only 65% of people looking for personal loans are below 30. Only 21% of home loan applicants are below 30. Lenders need to understand that different audiences can be segmented.
Although niche markets offer opportunities, it can also mean that data is required to reach them becomes complicated.
Recommendation : Use machine learning for personalization at scale
Companies can target diverse audiences efficiently with a data-first approach by personalizing everything, from product offerings to user experiences — at scale. Google Smart Bidding was used to process hundreds of signals from Max Bupa Health Insurance. This allowed it to automate the display of the correct content to the right audience. It also optimizes the conversion rate by continuously tweaking multiple signals. Max Bupa’s machine-learning-driven campaign resulted in 51% more incremental conversions and an 88% higher conversion rate.
4. Only trust brands are allowed to borrow from borrowers
Connecting with borrowers is only possible through trust. Google’s consumer survey revealed that 64% of credit buyers consider a brand a significant factor in selecting a loan provider 9, while 76% spend at least two weeks researching before choosing a lender. Due to the uncertainty surrounding the pandemic, consumers are more cautious about who they trust with money.
People tend to borrow from the same lender if they find one they trust. Only 32% of consumers who took out a consumption loan switched to another lender on the subsequent loan. 10
Search is the most popular tool used by borrowers to find credit products. There are nearly 1 billion credit-related searches 11, and 55% of borrowers use online tools or recommendation platforms to connect with potential lenders.
Recommendation – Win customers trust with authenticity
Consumers who purchase financial products value trust more than any other sector. Your brand must be trustworthy, honest, and have good intentions. Be upfront about your product, including terms and conditions. Customers need to reach you. These trust principles will influence how customers perceive your brand.
To deepen your customer relationship, don’t sell. Offer something of value. DBS provides, for example, financial literacy articles via its channels to help educate its customers. It has also set up forums on social media that allow the community to engage in discussions about finance. The brand builds a community and connects with customers on a personal level.
5. Digital lending is the future of lending
Businesses must follow the lead of the fintech sector and customers who are increasingly turning to digital banking. The outstanding balances of fintech non-banking financial institutions (NBFCs), increased by 300% between 2017 and 2020.
They were also responsible for 45% all personal loans disbursed by banks in 2020. They also accounted for 45% of all personal loans disbursed in 2020.
Fintech customers don’t just come from urban youth. They span all geographical borders. Nearly 70% of disbursals and 52% percent of searches 13 are made outside India’s Tier-1 cities. 82% of the audience is older than 25.
Recommendation – Democratize digital banking with Cloud
Lenders have the opportunity to gain an advantage in the rapidly growing retail credit market by moving their business to a cloud platform. It’s open, secure, and agile. Macquarie Bank in Australia, for example, has built its digital platform using the cloud. It uses an open API architecture that allows developers to connect their services and work securely with it. Macquarie receives new, innovative tools that are built on top its existing products. This allows Macquarie to increase developer relations and gives customers more control over their experience.
Lenders have a huge market to tap into with India’s new borrowers and the retail borrowing boom there. Data and technology are powerful tools for segmenting this vast audience and reaching them at scale. Lenders need to learn their language and earn their trust to build long-term relationships with emerging borrowers.__S.116__
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