We are now in the era of technological innovation, where financial inclusion is a big part of the system. Governments across countries are trying to include all their citizens under the same financial service so that all the country’s citizens can enjoy the benefits of banking systems and reach their financial goals.
The technological revolution hastened the race, and with new startups and companies around the corner, the job has been easier for financial institutions as now they can leverage these technological companies and take advantage of their platform to provide financial services across Tier 2 and 3 places in the country.
In this blog, we will look at the intersection of finance and technology and how that is giving rise to the new banking and lending features and helping customers to get loans instantly.
1. Digital Platforms Reshaping the Lending Landscape
Digital platforms are now the food and fodder of the customers as many are getting a lot of things done through their smart devices and phones. The same is true for the banking industry, and here, digital platforms are also bringing change.
The rise of the FinTech industry is a game-changer when it comes to helping financial institutions to reach new grounds. There are FinTech companies that have disrupted the traditional lending models, which were asset-heavy.
Loans can now be provided with a more streamlined process, where the platform is user-friendly, can gather information about the customer digitally, and can maintain the records in their digital profile. Financial institutions like banks and NBFCs tie up with these platforms and foray into online loan disbursements and can easily find relevant customers.
The advantages of the loan-seeking process have become easy, and from the bank’s part, the loan approval process now gets done within 24 hours. The customer now has 24/7 accessibility across the app or the online portal. Depending on their requirement, they can connect with the service agents regarding their loan offer, which has made the process convenient for the customers.
Understanding the Online Loan Ecosystem
There is a wide range of loan products available across platforms that cater to the financial aspect across a broad customer base. Previously, loans were only available to those who had high incomes; hence, the lower strata of society were completely shut out from the banking systems.
2. Loan Products in Online System
They used to take loans from money lenders and needed to fulfil their terms under a high interest rate. Most of the time, it becomes impossible for a lower-income person to repay the loan.
Here comes the digital banking system, where a person can get a loan of a small amount, and by repaying it successively, they can build a repayment history. It is the role of the financial service to include that segment of society so that they can also avail of the proper banking service.
Now, the loan products are different, and they are not only available for high-end clients. There are micro-loans that people can take and pay with easy repayment options. Local small vendors previously couldn’t get easy loans; now, they can get micro-loans for their business operations.
With the help of DSA partners, one can easily determine the type of loan that is required for them and hence can avail of that without much hassle. Hence, with the help of these apps and platforms, people can get a variety of loans, which was previously not possible to lend.
The Role of Machine Learning and AI
AI and machine learning are becoming more relevant these days as they are helping lenders make better disbursal decisions. It’s now integrated with the apps and can determine whether the person is eligible for that particular loan. It can help the individual by suggesting relevant products that the lender can disburse at that time.
With these features, people are getting more inclusive with the lending system, and the penetration is happening fast and at a rapid rate due to technological intervention.