How is Fintechs Transforming the Digital Lending Services across India?
Feb 10, 2021
FinTech, short for Financial Technology, is software that eases the process of performing financial services using technology. The concept of Financial Technology is constantly evolving. Initially, when it first started, its primary focus was traditional banking transactions. However, today FinTech is an efficient tool for any kind of financial transaction.
In other words, FinTech or Financial Technology is a modern online tool that supports financial services. Hence, making personalized banking and related financial services available for users as well. It is to note that Financial Technology started decades ago. However, only a few years ago, companies, businesses and banks opted to use FinTech for faster interaction with their customers.
The software FinTech uses can deliver financial services ranging from online banking, mobile payments, and cryptocurrency. The primary objective of the software is to change the way customers perform financial transactions. FinTech uses not one but a broad range of technologies. Fintech follows the approach of one size for all consumers. With personalized services and security, FinTech is gaining more usage among the technology-dependent generation.
Among the wide range of services, FinTech offers one revolutionary financial assistance in the form of Digital Lending.
What is Digital Lending?
The usage of Financial Technology or software for improving the process of applying for a loan is called Digital Lending. Most of these loans are online business loans that cater to the needs of start-ups or other business-related services. Digital Lending aims towards digitizing the process for applying for online business loans.
Digital Lending Process
The lending process in digital lending simplifies the conventional way of applying for loans, be it for mortgage or consumer. Some steps involved in the digital lending process are –
- The largest volume of customers in financial services are found in digital channels. The main reason being the internet-driven generation and their dependence on mobile banking or payments. In digital lending, software can get more data from customers. Hence, enabling a more personalized experience in online financial services for the customers.
- In order to be eligible for an applicant to apply for a business loan information to assess any risk is gathered. Financial services providers evaluate the applicant’s finance and credit history based on income and debt. All applicants require to meet the basic criteria in order to be eligible for an online business loan.
- The next step is the payout from the lender to the applicant. The time for disbursing loans in digital lending consumes comparatively lesser time because of financial technology. Loan repayments can be made in installments with the standard interest rates applicable for the particular loan.
Benefits of Digital Lending
Going digital means accelerating any process especially in terms of time. Technology-based financial providers are continuously changing the digital lending process for all businesses. Digital lending has become a new alternative for both lenders and applicants all over the world. Today, there are more digital lending providers than traditional banks.
While the most common benefits of digital lending are time and cost, there are more reasons to adopt financial technology –
With Cloud, financial service providers are already two steps forward than traditional banks. The unlimited storage in the Cloud, along with its fast collecting of data makes the digital lending process easier.
Due to the usage of technology, every step in the loan process is faster and done accurately. It also influences faster loan decisions and process applicants more efficiently. Automation also rejects applicants who do not meet the set criteria for loans.
FinTech and digital lending are the new normal in financial related services. With the ongoing pandemic, it has changed the financial industry to a large extent and will continue to do so in the future.