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Due to the Covid-19 induced lockdown, the set up of in-person and physical dispute resolution has come to a standstill and is expected to stay that way at least for some time. It has caused people to turn to digital technology for dispute resolution.
Technology-driven redressal mechanisms that are rule-based and transparent in the legal system called the Online Dispute Resolution involves minimal human intervention. It is due to the higher level of automation using digital technologies such as Artificial Intelligence, Machine Learning, data analytics, and blockchain.
The use of this resolution system is at a preliminary stage and has received big boost in the last few months. Moreover, consumers have been exposed to different types of digital communication interfaces in the last few months. This resolution system has the potential to reduce resolution costs drastically and provide enforceable outcomes in up to 45 days.
Our legal set up has also embraced the concept of an online resolution system as a binding resolution mechanism and that too providing an effective and convenient platform to all parties to the dispute in a contactless and safe manner.
Financial institutions have been traditionally averse to serving small ticket and formal credit score devoid consumer segments. It was left to public sector undertakings and few of the local private players.
A large amount of consumers has attracted the new age digital lender despite the regulatory arbitrage that is against them; to employ concepts like cluster centered funding, point of sale lending, cash flow based lending, and online microcredit. They began leveraging cutting edge technology and alternative credit assessment models to fill the credit availability gap and reach out to a broader customer base.
There could be a rise in the number of disputes in the aftermath of this crisis; therefore online dispute resolution system could be the essential cog in the digital transformation journey. Its integration will digitize the entire transaction trail from credit assessment to underwriting, from application to disbursal to collection and from resolution to recovery.
With the heat on the financial setup and the lending platforms, the question is not if digital dispute resolution should be integrated, but it should be asked by when. The lending institutions should focus on the last mile with the use of fully integrated digital solutions.
Read our article:Online Dispute Resolution System for Digital Payments