How is technology changing the digital lending landscape? Board 2022
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All over the world, all economic sectors have found a path of accelerated transformation due to the COVID-19 outbreak and rapid technology adoption, and the financial sector is no exception. Advances in technology coupled with customer expectations are changing the way lenders operate. Additionally, growing internet penetration and smartphone adoption are attracting traditional and new borrowers to digital lending solutions. According to a survey, around 40% of millennial-led borrowers are willing to switch to online mode instead of offline channels when obtaining credit.
The accelerating push towards the adoption of digital tools makes technology a key enabler for the digital lending market. Unlike the traditional lending market, digital lending addresses key market challenges that have been a bottleneck for the growth of many businesses and individuals in India. Customer issues, such as a cumbersome payment process, complex eligibility criteria, and a clear credit history for traditional bank loans, have driven digital lending startups. These digital pioneers are harnessing the power of technology to fill the gaps where banks and NBFCs make the lending process inaccessible to customers.
How Technology is Driving Online Lending
Online loans are more efficient
Although online loans are still in development, they have already proven their effectiveness. Platforms that provide these types of loans are available 24/7, which is perfect for small businesses, sole proprietors, and individuals in general. But what makes them so effective? Its ability to browse a lot of data in a jiffy.
If a person decides to apply for a loan online, that person can find out within minutes whether or not they are eligible for a loan. This is because online lending platforms are data driven. They can find creditworthy borrowers because they have access to more data, such as shipping data, accounting records, social media reviews, online sales totals, and more. In addition, these platforms have fairer conditions for a loan and are not limited to a simple credit score.
Online loans are profitable
Thanks to Fintech, many business owners and individuals are now able to cut costs and save a lot of time that they would normally spend in a bank. The traditional lending model is expensive, which is why more and more people are choosing to borrow money online. Different banks and private loan brokers have different fees which may be too high for some clients and they all take time to review documents.
Since online lenders have access to more up-to-date data, they can better assess whether or not someone qualifies for a loan. When it comes to running a business, every business owner wants to reduce their costs as much as possible so that everyone can understand why more and more people are choosing online loans.
Fintech makes online lending platforms more objective
Of course, all lenders have their specific terms and conditions that customers must meet to obtain a loan. With land-based lenders, most loans are granted based on the creditworthiness of the customer. If this score is good, the client will get the loan, otherwise not. Banks and private lenders need to review certain documents to verify a customer’s eligibility, and if those documents haven’t been updated, they could jump to the wrong conclusion. Since online lenders rely on more up-to-date data, they can make a more objective decision on whether or not a customer is eligible for a loan.
Final words: How is technology changing the digital lending landscape?
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