4 top Indian banks transforming the digital lending landscape

By Edil Corneille

Banks are utilising digital means to reach out to consumers in the midst of the COVID-19 pandemic. The population of India is so vast that financial institutions cannot afford to ignore digital means of conducting banking activities where they can have a better reach of customers. Indian banks are no exception to collaborations with FinTechs for the provision of improved financial services. Alternative data, open banking, and artificial intelligence are disrupting the digital lending sector of India.

Consumers can seamlessly secure a loan online with a minimum amount of paperwork required and the entire digital lending process of submitting documents, authentications, and disbursements of loans are carried out through channels available to end-users such as the mobile or internet banking platforms. Digital lending has reduced the time taken for the loan application process. The progress in financial technology has led to financial inclusion. Where previously the unbanked or the underbanked segment had great difficulties in accessing credit, now, these segments are eligible for online credit facilities.

Banks have heavily started to focus on investing in technological innovations to disburse credit. These traditional institutions are partnering with FinTechs to stay relevant in the digital lending scenario in India. Below are some of the top public as well as private banks in India that are on par with the competition in terms of making loans digitally available.

Bank of Baroda

In June, the public sector bank announced it was set to digitise its lending operations completely including home, agriculture, MSME, personal and auto loans, as reported by The Economic Times. The bank reached out to consultants like McKinsey and Boston Consulting Group for setting up a digital lending department. The digital platform will validate and disburse fresh loans. Past loans will be digitised too, to cut costs and improve on profitability.

Bank of Baroda has partnered with various FinTechs to offer instant digital credit. The ‘PSB Loans in 59 minutes’ is an online marketplace which helps in providing loan amount starting from INR 100,000 to INR 50 million to business entities. This initiative was taken to ease the MSME business by reducing the loan approval process. The platform leverages technology to strengthen the credit delivery system and facilitate the smooth flow of credit to MSMEs in a hassle free manner.

The bank has tied up with Switchme for targeting existing housing loan borrowers who are looking to switch lenders to take advantage of lower interest rates. Switchme is a loan aggregator that helps loan seekers to understand the different loan products available in the market and help customers in selecting the right lender. Bank of Baroda has empanelled Paisabazaar Marketing and Consulting for the sourcing of home loan applications from their digital platform.

ICICI Bank

The Mumbai-based private bank recently in September announced the launch of ‘Home Utsav’, a virtual property exhibition that digitally showcases real estate projects by developers from key cities across India. Offers such as interest rates, special processing fees, and the digital sanction of loans can be availed on buying a property through the exhibition.

In July, the bank apprised that retail customers could avail loans of up to INR 10 million instantaneously by pledging their holdings in both debt and equity schemes of mutual funds. This facility is completely digital and paperless with no requirements for branch visits. Customers can receive the loan as an overdraft (OD) within a few minutes without submitting physical documents. Called ‘Insta Loans against Mutual Funds’, the facility has been launched in partnership with ‘Computer Age Management Services’ (CAMS), a registrar and transfer agency for mutual funds in India. ‘Insta Loans against Mutual Funds’ is an extension of the Insta LAS, an instant loan facility against equity shares, which the bank launched over a year ago.

The bank’s ‘Insta Education Loan’ facility provides the sanction letter for education loans up to INR 10 million. Another digital facility called ‘Insta Flexicash’ can be availed from the Mumbai-based private sector bank’s internet banking platform. The facility enables its salary account customers to get an approval for an overdraft (OD) instantaneously, which is done in a paperless manner.

State Bank of India

SBI’s Online Loan Application Portal is a platform to apply for home loans, car loans, education loans and personal loans. It enables the customer to check their loan eligibility and get instant e-approval. The bank is creating a simplified paperless process for availing and servicing loans on digital channels. The digitised journey gives an instant decision upon the approval of a loan. There is 24×7 availability of loan applications. The risk scoring, decisioning and disbursal process is automated.

The bank’s ‘Online Loan against shares’ facility helps the customer to apply for a loan against shares which are held in their Demat Account of SBI Cap Securities. The whole processing is fully automated and the loan amount gets credited to the account without any requirements for a visit to the branch. Individuals can avail of loans up to INR 2 million against shares to enable them to meet contingencies, personal needs or even for subscribing to rights or new issue of shares. The ‘Online Overdraft against Fixed Deposit’ facility of SBI provides instant overdraft facility against e-TDR/ e-STDR through internet banking.

YES BANK

YES BANK announced the launch of its digital ‘Loan against Securities’ solution in August. The offering is said to enable customers lien mark their mutual funds digitally and avail quick and hassle-free loans. The digital solution has been launched under YES BANK’s ‘Loan in Seconds’ platform, allowing customers to set an instant credit limit against the securities held. Customers can now avail loans digitally without any additional documentation from the safety and comfort of their homes.

The Indian public sector bank in July launched a solution for the instant disbursement of retail loans for pre-approved liability account holders. The ‘Loan in Seconds’ solution is in alignment with the bank’s strategy of building a transformed ‘Digital Bank’. The digital solution launched by the bank leverages technology and analytics to play a critical role in identifying and customising offers for each individual customer. It aims to provide hassle-free loans to help customers meet their financial needs across products. The solution enables the credit of funds to a customer’s account in seconds where the loan gets processed ina few clicks. No documentation is required for the disbursement of a loan. The service is completely device agnostic and is available 24/7 across desktop and mobile devices.

Eligible customers under ‘Loan in Seconds’ will receive a communication from the bank with a link to apply for the service. A customer then needs to verify and accept the final offer, check the terms and authenticate the request for enabling the instant money credit into their account.