Loan Singh’s Weekly Special – The Concept of Digital Lending

Digital-lending-India

Introduction

We live in a country where there are close to 700 million mobile phone users. Just imagine how much easier it is now for people to perform tasks such as applying for credit, getting their application approved, and getting funds. Being digital makes everything streamlined. Your salary comes directly into your bank account, you update your statement via netbanking, you transfer money via NEFT, etc. The access to data is now much easier as compared to how it was earlier – thanks to the extensive use of e-KYC, NACH and Netbanking. Financial Technology (Fintech) envelopes everything from personal finance and payments to digital lending. Digital lending, in India, is growing rapidly and recent reports indicate that India is the third largest alternate lending sector in the world – after USA and China.

Digital lending, although existent in India for close to a decade now, is an online process of lending money to salaried individuals; done mostly via an app or platform. A digital lending platform, such as Loan Singh, relies exclusively on technology to perform processes in the loan lifecycle. Digital lending provides a superb opportunity for underserved & credit starved salaried professionals to apply for personal loans.  This is only a small percentage of those in need of credit. Majority of us still approach a friend or borrow money from family. For some, digital lending is viewed with much skepticism. You might worry as to how reliable can a digital lending platform be, with your personal and salary information being fed into the system. Loan Singh exercises precaution when dealing with your sensitive data by adding a secure socket layer (SSL) which establishes an encrypted link between the platform and your browser, ensuring the data that passes through remains private.

 

What is Digital Lending?

Digital lending is a lending solution which enables salaried individuals to apply for a personal loan with quick loan approval and fast disbursement; leveraging technology. Through traditional lending institutions dossiers of paperwork, no clarity on approval status, delays with regards to documentation, etc. make it a herculean task to get funds in times of emergency. On a digital lending platform, eligible individuals are provided funds based on their creditworthiness.

A digital lending platform combines the technology with credit lending principles. Borrower profiles are evaluated by credit underwriting algorithms to assess his/her creditworthiness based on multiple factors. The borrower then pays EMIs which the digital lending platform keeps track of. Borrowers can apply for a personal loan towards a number of purposes such as health, second hand car, festival spending, travel, marriage, home improvement, etc.

 

Why do we need it?

The ‘Digital India’ project swooped in at the right time to provide a lift to digital lending in India. With the combination of borrower data, algorithms and technology, the question arose as to what could be done with this trident to actually solve daily financial problems that was affecting India’s millennial generation. Financial services are the largest contributor to the GDP. The idea is to have a simple platform that provides quick yet effective financial services with good value. There are more and more millennials ready to accept a digital platform to solve their financial problems. The need for digital lending arises mainly due to the shortcomings in traditional lending solutions. Some factors that govern its rise are:

Technology

Making use of technology certainly puts a digital lending platform in the driver’s seat. For loan processing, there is a system required to check the documents, process the loan and disburse the approved loan amount. All these are done with the help of credit models that make use of borrower data. Digital lending allows for continuous upgrade of tools that are needed to make the loan experience faster and better.

Online

Imagine not needing to travel from bank-to-bank with documents, photocopies and application forms. With digital lending, the documents can be retrieved from the borrower’s internet banking account or uploaded from the computer. The borrower’s credit report is fetched online, and helps a digital lending platform to provide collateral free personal loans. So, without actually seeing the borrower, the loan is approved and disbursed.

Digital

There is least human intervention involved in digital lending. There are no executives to physically accept your application form or your physical documents. Therefore, there is no chance of partial tampering of documents or unbiased loan decisions via the route of digital lending. Digital lending also shortens the credit assessment time.

Application

The use a simple online application form, replaces the pile of exhaustive paperwork that could take-up an hour to fill; along with references and signatures.

Disbursement

With traditional lending solutions taking up to 2-3 days to get the loan from approved to disbursal stage, a digital lending platform will do the same within 36 hours; if all the eligibility criteria are met.

Security

Lending money is an activity that involves handling of sensitive borrower information – including the financials. This makes it paramount to protect the data. There are occurrences reported of identity theft and website hacks that make us skeptical to depend solely on digital lending. But, the hallmark of a good digital lending platform is making use of SSL layers for encryption.

 

Which is the best digital lending platform?

Despite India’s digital lending sector still in growth phase, one Fin-tech player has managed to tread farther than others in the segment. The name of this Fintech is Seynse Technologies. Seynse Technologies has also been a proud partner in launch of the Airtel Online Store.

Features of Loan Singh

Being a digital lending platform, Loan Singh embeds almost all of digital lending features. Some facets of Loan Singh are

Innovation

  • Automated underwriting using proprietary data modeling
  • Non-existent time delay in decisioning
  • Quick disbursement due to automated processes of assessment and lending

Adaptability

Innovation is ensured thanks to better quality of customer service with online chats, etc.

The risks taken by Loan Singh are tremendous compared to banks. Here borrowers don’t have to physically apply for the loan. PAN details and Bank statement PDF is enough.

Credit Risk (unsure of repayment), Market risk (unpredictability) and Operational risk (cyber-attack, technology outlay, etc.) are 3 risks that Loan Singh faces head-on & tackles while serving the under-served.

Transition

The traditional finance sector has always been a slow moving one. Digital lending uses “Speed” as a word for all its operations.

Loan Singh prides itself on its technology, which automates processes and hence traditional lending solutions such as banks will need to take more time to shift from years of standard tedious practices like lengthy paperwork and long list of documents.

 

How to apply for an online personal loan?

The process is simple and completely online. You need your PAN Card and latest 6 months bank statement. The statement has to be in PDF format only. You can apply for the personal loan by going to www.loansingh.com and clicking on ‘Start Your Loan Application’.

Get started page – Select ‘PERSONAL LOAN’ from the drop-down and enter the loan amount with the desired repayment tenure.

Registration page – Add your contact number, personal email ID and corporate email ID

Social authorization – Connect your Facebook, Google+ and LinkedIn profiles for discounted rates

Profile page – Fill in your name, gender, father’s name, number of dependents and PAN Details. We use your PAN Card Number to check your credit score and as a KYC document.

Address page – Choose your type of residence; mention your street address, city, state and pin code.

Job profile page – Mention your current designation, total work experience, company name, highest qualification, last institution attended and monthly salary.

Financials page – Upload your latest 6 months bank statement from your computer or fetch from your GMail account or net-banking account.

Auto debit page – Provide permissions to your bank name, account number and IFSC code so that Loan Singh can auto debit the EMI amount from your account every month. This way you don’t need to set reminders or miss-out on any loan EMI repayments.

 

What are Loan Singh’s advantages?

Loan Singh presents a number of advantages over other online platforms. Some of these advantages are

  • Minimal documentation
  • Fixed monthly installments
  • No hidden fees
  • Easy online loan application process
  • No prepayment penalty
  • Social authorization – a secondary identifier
  • Transparent process

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