Unauthorised fintech lenders critical threat to end consumers, industry: study

Unauthorised fintech lenders in India are critical threat to consumer trust and industry stability, cautioned a Fintech Lending Risk Barometer Report 2024 released by The Fintech Association for Consumer Empowerment (FACE) in collaboration with Grant Thornton Bharat on Thursday.

According to the report, unauthorised fintech lenders (mostly app-based) remained the top risk with a severity score of 6.1 on a scale of 7, and some 74% of respondents identifying unauthorised lenders as a critical threat to consumer trust and industry stability.

Rohan Lakhiyar, Partner, Grant Thornton Bharat said, “The FinTech lending landscape in India is evolving at an extraordinary pace, presenting both immense opportunities and significant risks.’‘

The report noted that cybersecurity continued to be a pressing issue, with 68% of respondents rating it as high risk. The increasing sophistication of cyber threats endangers consumers, undermines their trust in digital loans and risks provoking more stringent regulatory requirements, which could impact the entire FinTech ecosystem, it cautioned.

The report also stated that fast-evolving regulatory changes were viewed as high risk by 61% of respondents, complicating compliance and bearing on funding and innovation. The report called for a policy framework to support consumer interests and sustainable and predictable business environment.

Some 46% of respondents flagged aggressive marketing and unethical collection practices as high risk.

Sugandh Saxena, CEO of FACE, underscored the report’s importance, “The top risks highlighted are interconnected and require coordinated and concerted engagement within the ecosystem. By facilitating continuous dialogue and collaboration, we can safeguard consumer interests and create a robust ecosystem that supports innovation, stability, and financial inclusion.”