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How technology is transforming the digital lending landscape? – Guide
All over the world, all economic sectors have found their way to accelerated transformation due to the COVID-19 outbreak and rapid technology adoption, and the financial sector is no exception. Technological advances coupled with customer expectations are changing the way lenders operate. Furthermore, increasing internet penetration and the adoption of smartphone devices are attracting both 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 getting credit.
The accelerated push for the adoption of digital tools makes technology a key enabler for the digital lending market. Unlike the traditional lending market, digital lending is facing major challenges of the market which has served as a bottleneck for the growth of many companies and individuals in India. Customer pain points such as a tedious payment process, complex eligibility criteria and clear credit history for loans from traditional banks have led to digital lending startups. These digital pioneers are harnessing the potential of technology to fill the gaps where banks and NBFC companies are making the lending process inaccessible to customers.
How technology drives online lending
Online loan is more efficient
Although online lending is still under development, it has already proven its efficiency. Platforms that offer this type of loan are available 24/7, which is perfect for small businesses, individual entrepreneurs and individuals in general. But what makes them so efficient? Its ability to analyze a lot of data in a snap.
If a person decides to apply for a loan online, that person can find out in a matter of minutes whether they are eligible for a loan or not. This is because online lending platforms are data driven. They can get credit worthy borrowers because they have access to more data like remittance data, accounting records, social media analytics, online sales totals and more. In addition, these platforms have fairer terms for a loan and are not limited to just a credit score.
The online loan is economical
Thanks to Fintech, many entrepreneurs and individuals are now able to reduce their 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 opting to borrow money online. Different banks and private loan brokers have different fees which can be very high for some customers and they all take some time to review the documents.
As online lenders have access to more up-to-date data, they can better assess whether someone is eligible for a loan or not. When it comes to running a business, every entrepreneur wants to reduce 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 and customers must adhere to them in order to get a loan. With land-based lenders, most loans are granted on the basis of the customer’s creditworthiness. If this score is good then the customer will get the loan, if not then no. Banks and private lenders must go through certain documents to verify a client’s eligibility and if these documents are not kept up to date then they can come to the wrong place. conclusion. Because online lenders rely more on up-to-date data, they can make a more objective decision on whether or not a customer is eligible for a loan.
Final note
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