| |October 20219Acceleration Towards Digital Intensified by COVID-19: The need for social distancing created by the pandemic forced people to seek online avenues for all their requirements. The concept of online transactions for all financial products really took-off after March 2020 when people started actively exploring digital channels as an alternative to visiting the banks/NBFCs.Switch to Digital - A Matter of Survival for Lenders: Simply put, lenders have been forced to adapt to the digital lending platforms as a matter of survival. Anyone who doesn't will perish creating a dinosaur moment in the world of lending.What are the benefits of Digital Lending?Reduces Borrowing from Informal Sources: Digital lending has democratised access to funds by extending its reach to anyone who has a smartphone and internet access. This has reduced the dependence on usurious money lenders leading to a faster, cleaner and cheaper line of credit.Drastic Cut in the Time Taken to get a Loan: From being a matter of weeks or days, getting a loan has become a matter of hours today, thanks to digital lending. Simplified processes and elimination of paperwork ensure that application for loan is quick and convenient. This is one of the main reasons why digital channels have become the preferred option for borrowers.Good Channel for Micro Enterprises & Low Income Consumers: Borrowing money for business or personal use has never been easier. The eligibility criteria for loans have been simplified and made transparent. The system algorithms take care of the loan eligibility parameters while eliminating the human bias, making it easier for all sections of the population to access loan products.Protection of Lender Interests by the Use of AI: Digital platforms have inbuilt intelligence to run customer background checks and verify the documents submitted, obtain the credit score and other functions. This allows them to make unbiased decisions that are quicker, cheaper and safer, thus reducing the risk of defaults.Creation of Tailored Offerings: Digital platforms offer lenders the flexibility to create tailored offerings for customers with flexible repayment options. This gives borrowers a wide array of options to choose from and pick a loan product that meets their specific needs. For instance, a personal loan fintech portal offers customized personal loans for different purposes like a wedding loan, home renovation loan, medical loan, a rental deposit loan and so on. The customer can choose from a variety of repayment options like an interest only EMI with bullet payments for principal, a step up option and more. This allows borrowers the freedom to pick the loan according to their need and choose a repayment plan that suits their convenience.Creating a Digital Backbone: Automation of processes using APIs makes digital lending a quick and contactless process that provides an enhanced user experience. Today the borrower simply needs to fill in a form on the online portal and upload the basic documents like the PAN Card, Aadhaar card, three month salary slips and the bank statement for six months. The loan application gets evaluated, approved and credited to the back account without any hassle if the documents are in order.Boosting Digital Financial Inclusion: Financial inclusion is boosted by the use of an ecosystem approach that collaborates with telecoms, local merchants and other service providers to create the last mile connectivityManaging the Cybersecurity Risks: Digital lending platforms manage the data security risks by using firewalls and smart networks to ensure data integrity. The aim is to ensure the integrity of the data that is available on the platform and prevent it from fraudulent or unauthorised use.Digital lending has become the preferred method of lending and borrowing, especially after the COVID pandemic. Both lenders and borrowers see value in this channel as it provides a seamless and contactless experience that manages the lender's risk on one hand and enhances the customer experience on the other leading to a win-win solution for all stakeholders. As India marches towards an era of increased financial inclusion, digital lending will continue to have a larger role to play in the near future. Automation of processes using APIs makes digital lending a quick and con-tactless process that provides an enhanced user experience
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