With youngsters increasingly preferring non-traditional careers and gigs for their livelihoods, several financial services startups have also sprung up to target these customers who may not qualify for traditional banking services.
In this direction, FPL Technologies, a two-year-old, Pune-based credit scoring company, announced that it has launched a free credit card targeting the youth, with very few joining formalities.
The company has tied up with IDFC Bank and Kerala-based South Indian Bank to launch its OneCard credit card, whose highlight is that it has zero joining and annual fees, and can be acquired in a relatively painless fashion.
“The SIB- OneCard comes with many exciting features like lifetime validity with zero joining and annual fees, 100% digital customer onboarding process, instant virtual card issuance, instant issuance of reward points and easy redemption within the app, etc,” said a statement announcing the launch of the SIB Onecard.
The card is made of metal and works on the VISA platform. It has NFC and also boasts one of the lowest forex fees in the market at just 1%.
However, OneCard typically imposes charges in case the user decides to cancel the card within six months, or loses the card. It also charges similar levels of interest as other banks.
The service is also tailored towards identifying creditworthy individuals — irrespective of their financial and income status — by studying their spending and payment patterns.
Technically, the customer will belong to the bank, but most of the data churning and targeting will be done by FPL Tech.
The company has an app that is designed to serve as a companion to the card. The onboarding of the customer too is based on video KYC through an app.
“This next generation credit card is the best product to offer to India’s young population,” South Indian Bank said, adding that it is planning more such tie-ups with fintech companies.
FPL Tech is backed by international VCs such as Sequoia and Matrix.
Several other markets, such as the US, are also seeing the rise of credit card startups that target the millennials and Gen Z.
Due to their aversion towards traditional notions of career-building and jobs, as well as the lack of such opportunities, a large number of youngsters find themselves without the kind of predictable monthly income their fathers and grandfathers were used to.
As a result, many of them do not qualify for traditional banking services, particularly loans and credit.
These start-ups use big data and analytics to study the spending patterns of these people to figure out their creditworthiness, instead of the traditional metrics such as stability of monthly incomes and so on.