Indian e-commerce giant Flipkart is all set to enter the financial services space with a focus on offering credit and insurance products to both consumers and sellers on its platform, a report by the Economic Times said.

According to the report, the company has already begun the process of applying for an NBFC (Non-Banking Financial Company) license and will commence its fintech services with microlending and micro-insurance for purchases on its website. In the long run, the company plans of moving to products such as general and life insurance, beyond its platform, the report added.

Consumer lending to drive growth

According to the firm’s senior vice-president Ravi Garikipati, given that around 60% of the over 100 million customers of the e-commerce website don’t have access to credit, the microlending service will shorten this gap and enable this segment of the customer base to make large purchases.

Consequently, Flipkart expects its lending products to contribute to 15-20% of its growth over the next three years. Garikipati said that at present, the “buy now-pay later” product has 6-8 lakh users, with a 60% repeat rate. According to him about 80 lakh Flipkart customers are eligible for it.

It must be noted that apart from partnering with banks and other financial institutions to offer EMIs to customers, the e-tailer has previously launched a credit service, dubbed ‘buy now, pay later’ to select patrons last year. However, the Bengaluru based company says that a gap still exists between its credit offerings and large purchases, which in-turn hinders the firm’s growth.

As far as insurance is concerned, Flipkart is looking to co-create new insurance products aligned with e-commerce, such as mobile protection insurance, including theft insurance and damage, and return shipping coverage for sellers, Garikipati said. It has to be recalled that there have been reports last year, suggesting that the homegrown company is set to roll out insurance services on its platform.

Set to battle Amazon

Although offering credit to consumers has the potential to improve its market share, Flipkart’s arch-rival, Amazon is not the one to be left behind. In an interview with Business Standard, Amit Agarwal, Amazon’s India chief suggested that the US online behemoth could also offer a similar lending service. “If you don’t really have a financial institution that can give you credit, then we will give you credit because we know you so much more because you come to us every day,” said Agarwal.