It was inevitable! With years of pain points not addressed, lengthy paperwork not shortened and weeks of uncertainty to learn of your loan status, banks are no longer the single largest lending monopoly.
Digital lending platforms have taken the lead in terms of quick service, digital process, disbursement within few hours etc.
Let us look at 3 ways through which Digital lending is strengthening financial services around the globe.
- Automated underwriting using data modelling.
- The time delay with banks has evaporated (Apps, internet and more…)
- Quicker disbursement due to automated assessment and lending processes
- Innovation has ensured better quality of customer service with chat bots, online chats etc.
- The risks taken by Digital lending platforms are tremendous compared to banks. Via Digital lending borrowers don’t have to physically apply for the loan. Based only on documents.
- Credit Risk (unsure of repayment), Market risk (unpredictability) and Operational risk (cyber-attack, technology outlay etc.) are 3 risks that digital lending platforms face head on while trying to serve the under-served.
- The traditional finance sector has always been a slow moving one. Digital lending uses “Speed” as a by word for all its operations.
- Digital lending is simply based on technology, that means the processes are automated 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, long list of documents etc.