“We’re witnessing the creative destruction of financial service, rearranging itself around the consumer. Who does this is in the most relevant, exciting way using data and digital, wins!” – Arvind Sankaran
According to the Ernst and Young Global Fintech Adaptation Index 2019, India has increased its fintech adaptation growth to 87%. However, the adaptation rate across the world is approximately 73%. So, without a doubt, fintech is one of the fastest-growing sectors of this country. Sounds fascinating, doesn’t it?
Owing to the increasing contributions of fintech solution providers, such as KredX, India’s digital lending market is growing exponentially. As per Statista, its value is expected to reach the $350 million-mark by 2023.
How has financial technology revolutionised the digital lending process? Keep reading to know the details. But first, let’s understand the concept of digital lending.
What Is Digital Lending?
Digital lending is a process that utilises financial technology or software to digitalise the application procedure of loans. It involves lending via online platforms and mobile-based applications by leveraging authentication technologies and credit assessment.
How Are Fintech Companies Changing The Landscape?
Fintech companies are now garnering great popularity for spreading financial awareness among consumers and helping them take control of their finances. Contrary to traditional lenders, such as banks and NBFCs, these companies are much more advanced. Here are some of the best aspects of Fintech solution providers that prove to be instrumental in streamlining India’s digital lending services.
Automated Underwriting Procedure
Conventional lending institutions, like banks, rely on their personnel to carry out the loan underwriting process and assess the risk profile of borrowers. Nevertheless, fintech solution providers have automated the process. Thus, the entire procedure has become less time-consuming for borrowers. Besides automation, cloud computing also plays a vital role in streamlining the lending process.
The combination of fast data collection and unlimited cloud storage has undoubtedly simplified the digital lending procedure.
Faster Availability Of Funds
This feature certainly sets apart fintech financial service providers from traditional lenders. Fintech companies have accelerated the loan disbursal procedure. The application procedure, including documentation and approval, is now faster than ever, allowing a more convenient agency for dealing with emergencies.
Effective Utilisation Of Data
Fintech solution providers in India use an alternate credit scoring system that is much more advanced than the traditional one set up by the agencies. Financial institutions often reject loan applications as they do not have enough information to assess the creditworthiness of applicants. However, fintech solution providers evaluate the credit profile of applicants by assessing their digital footprints.
This may include a collection of data from other financial service providers, like mutual funds, insurance companies, etc. Moreover, fintech companies even collect data from electricity providers. Hence, this credit-scoring system is much more comprehensive in nature.
Efficient Security System
The fintech sector in India uses advanced technology to ensure your financial details are safe and secure. Usually, they use tokens to view their potential customers’ data from other online platforms. But, be assured that these companies will not be able to store your data. This eliminates the possibility of them utilising your data for any other purpose.
There are additional procedures, for example, encryption and website security, that makes sure your information remains protected at all times.
Diverse Product Offerings
Fintech companies in India offer various forms of financial assistance to help borrowers fulfil varied requirements. A few examples include personal loans, business loans, car loans, MSME loans, invoice discounting, etc. The availability of a wide range of products after the arrival of fintech companies has significantly contributed to the growth of India’s lending markets.
Advanced Lending Models
Usually, financial institutions accept deposits from the public and extend loans to borrowers. They make money by charging borrowers a higher interest than what they pay the depositors. However, the fintech companies of India have managed to build a more efficient business model with their peer-to-peer lending. It has provided a platform for lenders to earn interest by providing financial assistance to individuals who need access to funds. Fintech companies charge a fee for the platform that connects borrowers and lenders. By introducing this business model, fintech start-ups in India have posed a strong challenge to banks and other financial institutions’ traditional working model.
Fintech companies have revolutionised India’s digital lending services by enabling borrowers to get access to funds in the most convenient way possible. As these companies continue to evolve, there’s no doubt that these will become one of the most preferred financial solution providers in the recent future.