As the second-most populous nation in the world, India has always experienced a widespread need for credit. The outbreak of the global pandemic further intensified the credit demands throughout the country as medical and financial emergencies erupted. At a time like this, the traditional financial institutions, with their cumbersome lending process and reluctance to lend money to several segments, proved inadequate to meet India’s growing lending needs.
Owing to the innovations in the fintech sector, digital lending came to the rescue of countless borrowers in dire need of instant loans. Disrupted by the tidal wave of technological transformations, the digital lending space is moving on an exponential growth trajectory in India. According to the stats the digital lending sector is expected to surpass the $350 billion valuation by 2023. With increasing smartphone and Internet penetration, new and underserved borrowers are applying for instant loans through digital lending channels.
Digital lending refers to the process of disbursing loans online, wherein all processes encompassing borrowing and lending, such as loan application, approval and repayment, take place remotely through the web or mobile apps.
Digital lending platforms leverage advanced technologies such as Artificial Intelligence, automation and data analytics to simplify and accelerate the borrowing process for customers.
As a result, borrowers can apply for instant loans online, upload necessary documents and get approved for the required amount with minimal to zero paperwork.
With the emergence of the digital age, securing loans has become ever so easy and instant. By leveraging the latest technologies, new-age lending platforms have enabled a fully digital lending process with the least paperwork and a seamless customer experience.
All customers need to do is create a profile on the platform, upload the required documents, select loan amount and tenure and wait for the approval. The approval is provided almost instantly and the loan amount is then transferred to the individual’s bank account.
It is no secret that traditional financial institutions heavily rely on credit scores as a lending parameter. Due to this, first-time borrowers with no credit history or those with poor credit scores find it impossible to gain loans.
Digital lenders, on the other hand, forego traditional criteria for instant and short-term loans, thereby making the lending process more accessible and financially inclusive.
Their flexibility and leniency make digital lending a preferred choice for underserved and new customers and even allow them to build a credit history.
INSTANT LOAN DISBURSAL
Long gone are the days when borrowers waited for weeks to secure a loan. Digital lending apps have expedited the loan disbursal process by eliminating time-consuming paperwork and approval processes. Today, borrowing a loan can be as easy and fast as the click of a few buttons. Since the entire lending process takes place over the Internet, loans are approved and disbursed faster than banks. Moreover, the implementation of e-KYC has simplified the verification and authentication of borrowers’ credentials and identity. As a result, loans are sanctioned much quicker and instantly transferred into the borrower’s bank account.
Digital lending platforms have indeed outperformed traditional lenders like banks and financial institutions to make the lending process borrower-friendly. Due to the complex lending process and rigid policies, conventional lenders adopt, many borrowers find the lending process confusing, stressful and non inclusive. But digital lending platforms are effectively bridging this gap with their customer-oriented practices, frictionless process and financial inclusivity. Borrowers of instant loans do not have to visit any branch even once and can secure loans with no paperwork from the comfort of their homes.
Several digital lending platforms are providing loans at a reduced ticket value of as less as Rs 1,000. With the advent of small-ticket personal loans, the purchasing power of people has increased. For instance, if a person wishes to buy a smartphone worth Rs 40,000 but only possesses Rs 30,000, then instead of buying a cheaper smartphone or delaying the buying process, they can apply for an instant loan of Rs 10,000 and buy the smartphone. Loans of smaller amounts have shorter repayment tenure and attract many borrowers looking to fulfil their instant borrowing needs.
New-age instant loan apps and digital lending platforms are proving to be instrumental in leapfrogging the gaps of traditional lending institutions and are paving the road to financial inclusiveness. Their seamlessly digital and instant loan disbursal process along with a borrower-friendly approach and availability of small-ticket personal loans has contributed to their popularity immensely.
With constant innovation and technological advancement, digital lending is sure to become even more convenient, seamless and secure in the coming years. With the ease of securing instant loans anytime, anywhere, digital lending can bridge India’s widening credit gap.
(The article is written by Arjun Passi – VP Business RupeeRedee)