What is Digital Lending?
Digital Lending is the platform which offers financial institution an opportunity to improve productivity and increase the revenue per loan to deliver faster services. Digital lending makes optimum use of technology where the sensitive details are not disclosed.
Digital Lending permits borrowers to apply for any consumer or business loan product from any internet-working device at any location. Consumer or Business loan products are credit cards, business loans, or mortgage. Through digital lending, Fintech companies and banks provide loans to consumers by using digital means. The entire process is conducted digitally.
What are the key benefits of Digital Lending?
Earlier the fintech companies use to apply the traditional process of loan disbursement which was exhausting for both the borrowers and companies. With the Rapid shift towards digitalization, the lending process has become so quick and has added the list of conveniences for both the companies as well as the borrower.
Digital Lending includes managing loans and its process online through the web or online platforms. Additionally, the current advancement of payment trends also entails the digitalization of the lending process.
The key benefits of Digital Lending are-
The better loan disbursement process
Use of digital platforms has reduced the geographical barriers in the loan disbursement process. With digitization, borrowers can quickly take up loan applications without facing geographical issues. Moreover, digital lending platforms offer highly customized user experience, smooth loan application procedures, and ease of entering data quickly.
The Easy process to capture the applicant’s detail
Digital lending has minimized the chances of human errors. Through digital lending, it became easy to capture the applicant’s detail. In digital lending, the validity of the borrower’s document can be scanned digitally making the process a whole lot quicker, and less burdensome.
The Digital lending process guarantees quick decision making
Through Digital lending, Instant loans are the norm today. Nowadays, the loan applicant has no patience to wait for days before they have their application approved.
Accepting digital automation allows lenders to exhibit auto decision making to ease the application approval procedure. With the digital lending platform, lenders can quickly view the client’s credentials and documents through the verification and decision process.
A digital lending platform increases efficiency as it reduces overhead by 30–50% which results in time savings, enhances revenue, and High growth opportunities. Further, it also improves borrower relationships with the lenders.
Offers greater consistency in lending
Digital lending eliminates the irregularities in underwriting decisions and guarantees great consistency in lending decisions.
Digital lending offers an easy application process, rapid decision making, and an adaptable lending process. The technologies used in the Digital lending accelerates the entire process and allows the lending companies to revert on the applications quickly.
Growth of Digital Lending in India
In India, Digital lending has completely changed the lending system which was in existence. The Digital lending process has completely changed the loan application process. Now, every step of the lending process is done electronically which means the process is completely paperless.
With the introduction of Digital lending, all the FinTech companies are promoting Paperless Lending which has given a new path to the lending industry in India. FinTech companies have merged the financial services with the updated technology to provide ease in availing and lending the money.
In India, FinTech companies offer lending within 24 hours. With this advancement, the borrowers need to visit the banks unnecessarily. With the digital lending platform, a loan is just a click away. What a borrower needs to do is go to the online portal of the FinTech company and fill the required details and apply for the loan.
Digital Lending Vs Traditional approach of lending
Earlier in India, the traditional approach was followed for the lending process. The process to apply for a loan through traditional lending was too lengthy, stressful, and time-consuming. Taking into consideration the loopholes of the traditional approach, it was very important to introduce a new kind of lending by keeping in mind the ease of the borrower to avail any kind of loan. Digital Lending was introduced in India as the solution to all the above loopholes.
Digital Lending is a platform which has provided advancement in the lending and borrowing process where a person can borrow within a short period, without any paperwork. Digital lending has made borrowers and lenders free from the traditional lending process where one has to spend a lot of time collecting and arranging the documents.
Digital Lending Model
Digital Lending is the process of offering loans through digital channels. The Digital lending process is an end-to-end process of developing and delivering financial products that are available for disbursing loans. The digital lending models are–
- Online lender
- P2P Lender
- E-commerce and social platforms
- Market platforms
- Supply chain lender
- Tech-enabled lender
- Mobile money lender
How Digital lending is helping the MSME and SME Sectors?
In India, digital lending is changing the financial framework of the MEME and SME sector. Banks are moving fast to adopt the digital lending platform and automate back-end processes to achieve the short- and long-term benefits. The digital lending is not only helping the MSMEs and SMEs in reducing the time taking the process of loan sanction but also reducing the processing cost involved in lending to these units.
MSMEs, SMEs, and financial institutions are exploring some of the upgraded technologies like
- Artificial intelligence,
- Big data and analytics used in digital lending.
New Financial technologies have brought a revolution in the MSMEs and SMEs in India. The upgraded technologies are allowing MSMEs and SMEs to move from traditional funding methods based on advanced cash flow lending.
With the advancement of innovative digital lending platforms, smaller enterprises (MSMEs and SMEs) with less financial records or credit history are getting some suitable access to credit. The use of digital technologies such as Artificial Intelligence, machine learning, and data analytics is helping MSMEs and SMEs to extend customized working capital solutions.
How Enterslice is helping in Digital Lending?
- Enterslice helps its client in getting a company registered with the ROC with digital lending objects (P2P Objects and Loan aggregator objects).
- Enterslice provides advisory on Payment Bank Business Model.
- It provides its clients with a unique Business plan for Digital Lending platforms.
- Proper market research and Product analysis.
- Proper assistance in preparing the documents and filing the application to the regulatory authorities.
How Enterslice helps in providing a P2P lending license?
P2P lending is a technology-driven business model for online lending. Enterslice provides full assistance in getting a license from the RBI. It helps its client by providing proper guidance-
- Enterslice helps in getting the company incorporation with ROC with P2P objects.
- Assists clients in preparing proper documents.
- Filing the P2P lending license application with RBI.
- Follow up with the RBI and timely reply in case of any query is raised by the authority.
- Prepares Business plan and lending model.
- Provides services post getting the license.
- Risk and Legal advisory.