With 34 percent (440 million) of the country’s total population, India has one of the largest millennial populations. Together with GenZ, they are estimated to comprise 50 percent of India’s population by 2030. On an average, Indian millennials spend about 17 hours online weekly with 11 percent of time spent on banking including transactions.
Millennials in India are increasingly adopting a digital-led financial life, with digital credit and payments becoming the most preferred financial tools to meet their short term and long term goals.
In 2022, millennials continued to constitute a majority when it comes to availing of lending products, contributing to 44 percent of the total transactions, a report by Freo highlighted.
The share of smaller loan ticket sizes has also increased compared to the previous years by 10 percent in terms of volume. This is a strong indication of the fact that millennials are not afraid to take loans to meet their short term and long term goals.
The number of credit transactions increased by 7 percent in 2022 while the average ticket size of credit increased by 63 percent in 2022. When it comes to large ticket loans, healthcare continued to be a top priority followed by housing.
When it comes to credit, over 33 percent of total transactions came from the age group of 18-25. As far as digital payments are concerned, Gen Z holds 31.57 percent of the total transaction share, followed by Gen X with 7.64 percent, data by Freo revealed.
This data is reflective of the fact that though Millennials are at the forefront of adopting digital financial products, Gen Z is quickly catching up in the usage of these products and is increasingly looking at credit and payments as a means to a better lifestyle and empowerment.
Increased millennial participation from Tier 2 & 3
Millennials from Tier 2 & Tier 3 cities & towns are adopting digital financial products rapidly, with 89 percent transactions of digital payments coming from Tier II cities, revealed the report.
Pay Later is largely preferred and used by customers from Tier-2 cities for their daily spends, as their share of transactions is at 89 percent, compared to Tier-1 transactions at 11 percent. This indicates that the access to financial products has improved significantly in Tier II cities and millennials continue to remain the biggest consumer base for digital payments, the report further added.
Additionally, the number of female customers for lending products in 2022 also rose by 67.8 percent from the previous year. This increase suggests that women are not only becoming financially independent but are also invested in financial instruments like lending. This is also suggestive of the increased purchasing power of women in the country.
South India leads in digital finance adoption
When it comes to digital payments, Bangalore and Hyderabad continue to be the top 2 cities with respect to transactions with New Delhi and Mumbai holding the 3rd and 4th positions, said the report by Freo.
Among states, Maharashtra emerged as the state that relied on digital payments & small credit the most followed by Telangana & Uttar Pradesh, revealed the report.
Overall, South Indian states stood tall with a 35 percent share of transactions while the North & West followed with 27 percent & 20 percent respectively.