4 reasons to take a personal loan from a FinTech over a bank
By Leandra Monteiro
The FinTech industry in India has the potential to revolutionise the digital lending ecosystem and usher in an era of easy credit accessibility. Be it retail borrowers or small businesses, FinTech players can cater to their individual needs with customised credit solutions and efficient services. Easy access to credit has always been a challenge for NTC customers and underserved borrowers like cash-starved MSMEs.
Vivek Veda, Co-Founder and CFO, KreditBee and Co-Founder, FACE shares his thoughts on the same, “India, with its extensive spread and diverse demography, possesses highly varied financing needs. To promote financial inclusion in such scenario, simple, effective and impactful lending solutions are the need of hour.”
Vivek adds, “Effective financial inclusion is primarily possible with a deeper understanding of the consumer financing needs. FinTechs work towards transitioning the financing arrangement from a luxurious aspiration to a trivial commodity, accessible at a high convenience. Leveraging operational and technological capabili ties, fintechs put forth a more fitting and effective proposition as compared to traditional setups.”
The Financial technology sector is brimming with opportunities to improve credit flow to unbanked and underbanked sections of the society and help realise the vision of an economically self-reliant nation. Technological disruptions in the recent past have transformed India’s lending landscape and made way for a more digital-first approach. Here are 4 benefits of FinTech lending:
Customised products and offerings: FinTechs possess a high degree of operational dexterity. This coupled with their technological capabilities, allow them to effectively evaluate the borrowers’ financing needs. This, in turn, enhances their ability to cater to the diverse financing needs of a wider spectrum of borrowers, with personalised credit products, tailored to the requirements of the customers.
Enhanced Customer Experience: There’s been a surge in the popularity of remote financial services during the COVID-19 pandemic to reduce exposure to the virus, and the demand is here to stay even in the post-pandemic world. FinTech lenders are capable of delivering an end-to-end contactless lending experience by digitizing the entire process of onboarding of new customers, verification, underwriting, loan disbursal, and repayment, with minimal documentation required. This enables them to overcome geographical distances and cater to borrowers from even remote, far-flung areas from the comforts of their homes.
Reduced TAT, Improved Risk Assessment with Less Paperwork: With the help of cutting-edge technology, such as AI, ML, big data analytics, lenders can quickly analyze information gathered from alternative data sources such as digital footprints of potential borrowers and create a more comprehensive borrower risk profile. By automating this process, lenders can not only cut down on mundane paperwork; they can also enhance their risk management capabilities and reduce the risk of frauds and NPAs. Result? Faster loan underwriting, reduced risk for lenders, and instant credit for borrowers.
Greater Financial Inclusion: The reduction in dependence on physical documents also vastly benefits millennials, self-employed people, and thin-file small businesses who often lack sufficient credit history and adequate physical documents like bank statements, tax returns, and other records. This makes fintech a true champion of financial inclusion.
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