Fintechs turn to secured credit after success with unsecured loans

Fintech companies are shifting towards secured credit products after achieving success with unsecured loans. The move is driven by the need to diversify and mitigate risks associated with unsecured lending. Fintechs like Freo, Fibe, Kreditbee, and Paytm have focused on personal loans, consumer durable loans, and credit cards. However, the Reserve Bank of India’s recent directive to increase risk weightage for unsecured loans has prompted fintechs to explore secured lending options. This shift aims to ensure sustainable growth and reduce exposure to high-risk unsecured loans, while continuing to leverage technology for customer acquisition and credit disbursement.