Which are the key factors for global growth in the digital lending industry?
The Digital Lending Industry has transformed the process of lending and borrowing beyond recognition in the last few years. Going from a system that needed multiple visits to the lender, tremendous paperwork and piles of photocopies, not to mention the week-long wait at the least, digital technology has helped consumers to move to a platform where they can go from application to cash in minutes without moving.
What are the key factors that accelerated digital lending?
The need for digital lending was felt because the traditional process was too cumbersome and did not improve efficiency. It was expensive and time-consuming. The proliferation of the smartphone and the access to cheap internet access ensured that even underprivileged segments of the population could get the benefits of easy credit.
The pandemic of 2020 accelerated the process as the lockdown restrictions forced people to stay at home. Businesses had to find new ways to reach their customers and customers were forced to change their buying preferences and use digital modes to transact.
Customers have comfortably switched to the digital mode and this has been supported by the distinct advantages of digital lending over traditional lending.
Simple process – The digital lending platform such as the one offered by Celusion Technologies is very simple to use. It is a single integrated platform supported by APIs which helps in getting a loan very easily by offering the customers an extremely pleasant experience. The customer simply has to fill in the product he needs and upload the identification document. The smart form is auto-filled and the identification documents are verified in the background. The rule engines check the loan requirements and confirm if it is possible and offer the best rate. There is no paperwork and no human contact making it very convenient for customers.
User-friendly interface – The interface is extremely friendly and easy to navigate. Once the loan product is selected and the KYC documents uploaded, the system auto-fills the form using OCR technology based on the details available in the uploaded identification document. This ensures that the form is filled without any human errors and facilitates faster processing. Smoothly navigable, easy to use mobile apps make it very comfortable for customers. In fact the ease of digital lending has made customers prefer personal loans to credit cards for big-ticket expenses since they work out cheaper.
Automated Decision Engine – The automated decision engine is set up using complex algorithms to ensure that the lending decision is taken after considering all the risk factors involved. The use of rule engines eliminates human bias and ensures that the customer gets the right loan product at the best rates available. This is a win-win for both parties.
Quick disbursement –The traditional loan used to take a week to get disbursed while digital lending has reduced the time to minutes. If the documents are in order and the credit score is decent, a customer can get a personal loan in minutes without any hassle. For example, KreditBee offers personal loans from application to disbursal in just 15 minutes. The quick disbursement of digital loans has made it the instrument of choice for the younger generation.
No paperwork – The traditional loan was characterized by a lot of paperwork. Multiple forms had to be filled and several photocopies had to be taken. This used to be quite cumbersome for the customers and often resulted in several trips to the bank. In comparison, digital lending has eliminated the paperwork in the case of unsecured loans like personal loans. All customers need to do is fill up an online form and upload a few documents. This is quite a relief to customers, especially those who would run away from loans because of the complicated paperwork involved.
These obvious benefits of digital lending combined with the availability of smartphones have ensured the popularity of digital lending and accelerated its growth. Customer preferences have changed and businesses are trying to keep pace by offering superior customer experiences with the help of smart technology that can anticipate and predict customer needs and provide for them. Digital lending is fast becoming the choice channel when it comes to availing of funds for short term requirements. Smart algorithms and APIs running in the background have ensured a quick, efficient and risk-free interface for digital lending that is a cost-effective method that allows the easy penetration of credit to the underserved segments of society.