Traditionally, the loan process has been known to be quite tedious and time-consuming, requiring multiple rounds of approvals and numerous forms to be filled out. Consequently, securing the loan required several visits to the office and enduring extended waits for crucial approvals and signatures.
However, the digitalisation of loans has simplified the lending process. It refers to the use of technology across various stages of the loan process to reduce paperwork and improve customer experience, making the loan origination process quicker and more efficient.
Core Components of Digital Lending
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Easy Application Process
Digitalisation simplifies the application process and makes it much easier as customers can apply for a specific type of loan through the bank’s or NBFC’s website or mobile application. They can also complete the necessary KYC and verification process online by uploading pictures of their ID proof and other required documents on the portal. Additionally, before applying for a loan, customers can check their eligibility and credit score to determine whether they qualify for certain loans.
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Secure Transactions
Digital lending is a safe and secure method as such platforms usually use multi-factor authentication during transactions and login processes. Borrowers can also make EMI payments through various secure methods, including mobile apps, NEFT (National Electronic Funds Transfer), eNACH and online wallets like Google Pay, PhonePe. These payment modes provide quick, convenient, and safe transactions.
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Electronic Clearing System
The Electronic Clearing System automates monthly loan payments and reduces the risk of missed or delayed EMI settlements. The system is highly beneficial for both lenders and borrowers, as it ensures timely payments without the need for manual intervention. Once set up, a fixed amount is automatically deducted from the linked bank account on a specified date each month. It allows for a seamless repayment process.
Benefits of Digitalisation in the Loan Process
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Enhanced Customer Experience
Users can access the portal directly at any time and seek assistance from the helpline or help desk if they are facing any issues or have any queries. They can also apply for a loan anytime. Various features, such as tracking the application, checking the application status, and verifying KYC online, help build trust and increase transparency in the process. In some cases, such as personal loans, instant approvals can be highly beneficial for improving customer experience during time-sensitive emergencies.
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Informed Decisions
Borrowers can compare different lending options and choose the one that best fits their budget. They can also look for any additional perks or benefits offered by lenders. Many company websites provide smart EMI calculators enabling users to calculate their EMI, interest rate, and monthly payments easily. This helps them make better loan decisions.
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Scalability
Digital lending allows organisations to approve multiple loans at high volumes simultaneously without much difficulty. Many companies use AI-driven technology for accurate risk assessment. It helps them filter out ineligible borrowers, enabling faster loan approvals.
- Flexibility
NBFCs and banks have now started using AI and technology to create personalised loans, interest rates, and repayment options based on a customer’s credit profile. This allows for tailored plans rather than relying on pre-existing ones offered by the company. Other features that enhance flexibility include easy loan and EMI options, which provide customers with multiple payment modes and quick disbursals, ensuring a smooth borrowing experience.
Future Trends in Digitalisation of Loans in India
The future will likely see more technological upgrades led by AI and data analytics, enabling the creation of hyper-personalised loans tailored to an individual’s financial goals. With these advancements, loan approvals, disbursals, and top-ups will become almost instantaneous.
The goal of the future would be to extend financial inclusion to underserved communities. They often miss out on such opportunities due to various barriers or rely on traditional lending methods. This will ensure that more individuals can access financial assistance as needed.
Summing Up
The digitalisation of loans has made applying for and getting loan approval more efficient and effective. It not only saves customers time but also allows them to access various other benefits as well. It helps organisations reduce operational costs and minimise manual intervention, ultimately improving customer satisfaction and loyalty.
FAQs
What is the Digital Loan Process?
The digital loan process means using online platforms and digital technology to streamline lending, making it faster, more convenient, and accessible.
Is a Digital Loan Safe?
A digital loan is safe if taken from a reputable, regulated lender with secure platforms and transparent terms.
What is EMI in Loan?
EMI (Equated Monthly Instalment) is a fixed monthly payment a borrower makes to repay a loan, covering both principal and interest over a specified tenure.
