Joe, the millennial creditor, awaited with resentment, “with years of pain points not addressed, long paperwork not shortened and weeks of uncertainty to learn about the loan status, when this single largest lending monopoly will come to an end.” Years later, the system came from scratch, spreading out, kick-starting, and it’s going to dominate the field of conventional commercial banking in the near future. Joe is happy (literally everyone) about a system that is readily available, fast, helping him file for credit, having his application accepted, and getting him money anytime, wherever possible, without any refusal. When Paul asked Joe, “What exactly is the system? “Joe replied with enthusiasm, “God sent this to eradicate the pains of my financial burdens via Digital Lending—an online method of lending money to salaried people, often through an app or website.”

Blood, sweat, tears? —How is it going to uproar conventional lending?

With the emergence of Creditt, digital banking is reaching a vast number of people applying for a personal loan with fast loan acceptance and swift disbursement; exploiting technology. Extensive use of e-KYC, NACH, and Internet banking has improved access to data than before, which eliminates uncertainty and improves access to data with a lightning speed. It also blends technologies with the ideals of credit lending to make the operation more streamlined and sealed. Borrower profiles are analyzed by credit underwriting algorithms to determine their creditworthiness depending on several criteria. The creditor pays the EMIs to the digital channels.

“Joe doesn’t have to go to a friend or family to borrow money while he’s facing a financial crunch. Immediately, he gets the money depending on his creditworthiness. Now he’s getting rid of paperwork files. He can apply for a personal loan for anything without any hustle, from home.”

-In the same way, modern banking, with the aid of Data Analytics & Financial Technologies, solves the vulnerabilities of conventional lending.

Behind the locked doors of Digital Loan:

Some considerations are the reasons why Digital loans are in the driver’s seat. They’re:

Technology:

In order to process the loan, a system is required to check the documents, process the loan and disburse the approved amount of the loan. All of this is achieved with the aid of credit models that make use of borrower data. It makes the experience of the loan quicker and easier.

Digitalization:

The least human interference is involved here. Since the whole process is online and there are no executives to personally approve the application form or actual papers, there is no need to run from bank to bank with documents, photocopies and application forms. It prevents impartial loan decisions, shortens the collateral review period, and grants and disburses the loan without ever seeing the applicant.

Disbursement:

It takes 2 to 3 days to get the loan from approved to disbursal stage through traditional lending procedures whereas the same can be done within 30 minutes in digital lending if all the eligibility criteria are satisfied.

Security:

We have heard situations where the website has been hacked or identity theft has occurred, which could make us skeptical about relying on digital lending. As the whole digital loan process includes dealing with the personal information of the borrower, including financial information, trustworthy lending platforms often use the Protected Socket Layer (SSL) for encryption.

“I know the bottleneck & the Digital Lending Barrier”—says Joe:

It might be an interesting and helpful thing for Joe, but it seems disruptive and odd for many other people. If 2015 Bain & Co. study]ied, he can see that banks could handle only 7 per cent of digital end-to-end products and that customers submitted only 14 percent of loan applications through digital channels.

“With a long legacy of IT systems and increasingly complex operational and risk management requirements, most IT leaders are stuck with the basic problem of how to proceed quickly. Mind and world-view is one of the main disincentives for real success in lending transition.”

-Quotes the Newgan’s White Paper.

Still, “The Mindset Conundrum” is a key bottleneck, but newbies with a free, vibrant and adaptable mind bring some improvements to the table. The outcome is that over the last two years, we’ve seen a lot of start-ups, FinTech platforms and institutions usher in this new mode of lending in this industry that has so long been dominated by PSUs and private banks. Also, post-demonetization, the world is even waking up to cashless transfers, and other channels empowered by new players are digitizing. As a result, a fundamental transition will take place and the number of consumers of digital banking will grow.

The Automated Credit Message spreads:

“Technology can have an impact on space, when used well, for the right customer, at the right time.” Digital banking is redefining the industry in a small but effective way. Sure, it’s going to linger, and it’s going to embrace the banks.

Happy-Go-Lucky with Digital Loan!