Online lending startups have seen a 20-30% jump in user acquisition costs over the last few months, as both banks and fintech companies aggressively chase consumers through social media channels. The cost of acquiring customers, or the price platforms pay to on-board consumers, has increased significantly also due to higher borrowing costs. That has made fintech lending startups risk-averse, forcing them to be selective about their customer base. Fintech startups usually target consumers through online channels, by profiling search words that consumers type while looking for loans or by targeting specific audience groups. “When too many platforms are betting on similar ad words, then it becomes expensive to attract the right set of borrowers,” said the founder of a Bengaluru-based fintech lending platform. Since fintech platforms are extensively using digital channels for marketing, they are getting consumers who have been accepted by banks and major NBFCs. This could cause them to look harder for quality borrowers, thereby increasing costs. Fintech lending startups have worked on thin margins to attract customers from far-off places, on hopes that growing digital would help cut cost of operations.

(ET Tech)