Digital Loans: New Age Practice of Applying for Instant Loans
As the second most populous nation in the world, India has always experienced a widespread need for credit. The onset of the global pandemic has further intensified demand for credit across the country as medical and financial emergencies have erupted. At a time like this, traditional financial institutions, with their cumbersome lending process and reluctance to lend money to multiple segments, have proven insufficient to meet India’s growing lending needs.
Thanks to innovations in the fintech industry, digital loans have come to the rescue of countless borrowers who desperately needed instant loans. Disrupted by the tidal wave of technological transformations, the digital lending space is following an exponential growth trajectory in India. According to statistics, the digital lending industry is expected to exceed $350 billion in value by 2023. With increasing smartphone and internet penetration, new and underserved borrowers are applying for instant loans through digital lending channels .
WHAT IS DIGITAL LOAN?
Digital lending refers to the process of online loan disbursement, in which all processes encompassing borrowing and lending, such as loan application, approval, and repayment, take place remotely via the web or mobile devices. mobile apps.
Digital lending platforms leverage advanced technologies such as artificial intelligence, automation, and data analytics to simplify and speed up 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 paperwork.
With the emergence of the digital age, securing loans has become increasingly simple and instantaneous. By leveraging the latest technology, new era lending platforms have enabled a fully digital lending process with the least amount of paperwork and a seamless customer experience.
All customers need to do is create a profile on the platform, upload the required documents, select the loan amount and term, and wait for approval. Approval is provided almost instantly and the loan amount is then transferred to the individual’s bank account.
It’s no secret that traditional financial institutions rely heavily on credit scores as a lending metric. For this reason, new borrowers with no credit history or those with poor credit ratings find themselves unable to obtain loans.
Digital lenders, on the other hand, forego the traditional criteria of instant and short-term loans, making the lending process more accessible and financially inclusive.
Their flexibility and leniency make digital lending a preferred choice for underserved customers and new customers and even allow them to build a credit history.
INSTANT LOAN DISBURSEMENT
The days of borrowers waiting weeks for a loan are long gone. Digital loan apps have sped up the loan disbursement process by eliminating tedious paperwork and approval processes. Today, borrowing a loan can be as quick and easy as clicking a few buttons. Since the entire loan process takes place over the Internet, loans are approved and disbursed faster than banks. Additionally, the implementation of e-KYC has simplified the verification and authentication of borrower credentials and identity. As a result, loans are sanctioned much faster and instantly transferred to the borrower’s bank account.
Digital lending platforms have indeed surpassed traditional lenders like banks and financial institutions in making the lending process user-friendly for borrowers. Due to the complex loan process and rigid policies adopted by conventional lenders, many borrowers find the loan process confusing, stressful and non-inclusive. But digital lending platforms effectively bridge this gap with their customer-centric practices, frictionless process, and financial inclusion. Instant loan borrowers do not have to visit a branch once and can obtain paperless loans from the comfort of their own home.
Several digital lending platforms offer loans at a discounted note value of less than 1,000 rupees. With the advent of small personal loans, people’s purchasing power has increased. For example, if a person wants to buy a smartphone worth Rs 40,000 but only has Rs 30,000, then instead of buying a cheaper smartphone or delaying the purchase process, he can apply for a loan instant of Rs 10,000 and buy the smartphone. Small loan amounts have a shorter repayment term and attract many borrowers looking to meet their instant borrowing needs.
KEY POINTS TO REMEMBER
Instant loan apps and new-era digital lending platforms are proving critical in filling the gaps of traditional lending institutions and paving the way for financial inclusiveness. Their digital and instant loan disbursement process, along with a borrower-friendly approach and availability of low-cost personal loans have contributed immensely to their popularity.
Thanks to constant innovation and technological advancements, digital lending will certainly become even more convenient, transparent and secure in the years to come. With the ease of getting instant loans anytime and anywhere, digital loans can fill India’s growing credit gap.
(The article is written by Arjun Passi – VP Business RupeeRedee)