Published on Dec 19, 2024Updated on Dec 30, 2024
With nearly one billion unique digital identities and over 900 million internet users, India has adopted technology at an unprecedented scale. This widespread adoption has changed how people interact with financial services, raising a crucial question: what is the impact of digitisation on the loan industry? More importantly, what does the future look like for digital lending in India?
This article will discuss how digitisation has transformed the loan industry, along with key digital lending trends that can shape the future of digital loans in India.
Traditionally, borrowers had to visit branches multiple times to submit physical documents and complete other formalities when applying for loan products such as personal loans. The verification process was also manual, leading to lengthy loan processing times. The rise of digitisation has made it easier to apply for loans and submit documents from the comfort of your home. Depending on the loan type, your eligibility, and lender policies, loans can even be approved and disbursed within hours*.
Digitisation has made it easier for lending institutions to access vital information such as credit scores, payment histories, income statements, and existing debt obligations. The quick access and comprehensive view of an applicant’s financial profile have made decision-making faster and more efficient.
With the advent of technology in financial services, lending platforms prioritise the protection of user information. Borrowers can make EMI payments through various secure methods, including mobile apps, NEFT (National Electronic Funds Transfer), and online wallets such as Paytm. These payment modes offer quick, convenient, and safe transactions.
The Electronic Clearing System has made loan repayment easier by automating monthly instalments. This system reduces the risk of missed payments by deducting EMIs directly from the borrower's account. It benefits lenders by ensuring timely payments and borrowers by helping them maintain consistent credit records.
Digital lending has simplified the documentation process, transforming it from a cumbersome task into a hassle-free experience. For example, online personal loan applications typically require only a few essential documents, such as KYC proofs (identity and address), salary slips for the last 2–3 months, and bank statements for the past 6 months. Having these documents readily available in digital format can significantly speed up the application process.
User-friendly platforms and 24/7 accessibility allow borrowers to apply for loans anytime and from anywhere. The ability to track application status enhances transparency and builds trust. Moreover, the typically swift approval process – especially for unsecured products such as personal loans – makes it easier for borrowers to access funds quickly during time-sensitive emergencies.
Borrowers can compare offers from multiple lenders online, giving them access to the most competitive options in terms of interest rates, processing fees, and other loan terms.
Many online lending platforms provide tools like EMI calculators and eligibility calculators, allowing prospective borrowers to estimate their borrowing capacity and monthly repayment amounts. They help borrowers make well-informed financial decisions and avoid applying for loans that may not be the best fit.
Digital platforms or customer service apps make post-approval loan management convenient. Borrowers can track EMIs, request account statements, or even apply for top-up loans – all with just a few clicks.
The future will likely see lenders adopting more technological advancements, such as AI and data analytics. They will continue to prioritise smoother customer experiences through personalised loan options and flexible repayment tenures. Additionally, user-friendly digital platforms will ensure that borrowers can apply for and manage their loans with ease.
Digitisation has made lending more accessible, efficient, and user-friendly. While digital lending has simplified the borrowing process, the fundamentals of responsible financial management remain important. It's important to approach borrowing with a clear understanding of your financial capacity and long-term goals.
Looking for financial support to achieve your aspirations? SMFG India Credit offers personal loans of up to INR 30 lakhs* with competitive interest rates starting at just 13%* per annum. Check your eligibility, estimate your EMIs, and apply online for a stress-free experience.
* Please note that this article is for your knowledge only. Loans are disbursed at the sole discretion of SMFG India Credit. Final approval, loan terms, disbursal process, foreclosure charges and foreclosure process will be subject to SMFG India Credit's policy at the time of loan application. If you wish to know more about our products and services, please contact us
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