Here’s how personal loan apps are changing the lending space in India

By Puja Sharma

Online loan providers are making availing of a loan seamless, quick, and paperless for consumers. As a result of digitisation and such initiatives by the government, digital marketplaces connecting lenders to credit-seekers are continuously enhancing the efficiency of the lending process.

There has been a steady increase in personal loans over the past year, with a 13.5 % growth year-over-year in March 2021. This pattern has been consistent for some time. Personal loan apps have been driving the growth of lending space. Let us learn how such online apps are fueling the consumer lending industry in India.

The dominance of online loan apps

Digitalisation, demonetisation, and Covid-19 have contributed to the use of apps for monetary transactions. Digital consumers and government initiatives have paved the way for a robust digital economy. Changes in these areas have resulted in a massive transformation in how we access different banking services.

The process of lending has evolved immensely to facilitate easier discovery as well as hassle-free processing of loans. Similarly, the Indian government launched India Stack, an open API platform similar to eKYC. With this solution, finance companies can perform KYC verification digitally with mobile OTP or biometrics Documents can also be signed and submitted digitally with eSign. In India, such technological advancements have given the alternative lending segment a considerable edge.

Because of digitisation and such initiatives by the government, digital marketplaces connecting lenders to credit-seekers are continuously enhancing the efficiency of the lending process. As a result, online loan providers are making availing of a loan seamless, quick, and paperless for consumers.

With efficient technological solutions and digital tools like a set of open APIs and India Stack, online lending platforms have joined hands with NBFCs and banks to formulate efficient lending solutions for borrowers.

Online loans are easily accessible–deep analytics and automation have made the borrowers’ verification and credit assessment much more straightforward, faster, and considerably more accurate than before.

The digital signature feature allows applicants to e-sign–for greater accuracy in customising loan products, the digital lending platforms employ data analytics and AI algorithms that comprehensively analyze loan products offered by lenders like banks and NBFCs. The algorithms correlate loan products to the specific borrower requirements and pick a suitable loan product for borrowers.

Advantages of online personal loans

Below are some of the advantages of paperless personal loans:

1. Paperless transactions and online loans are the future of banking. The fintech market is fueled by a relaxed regulatory environment and the latest cutting-edge technologies.
2. Digitisation of end-to-end lending processes eliminates the possibility of human error. The processing of applications along with credit underwriting is overseen using technology.
3. Again, the absence of any mediators makes online, paperless loan processing much more convenient and dynamic for borrowers with urgent financial requirements.
4. Moreover, the new-age digital lending processes do not have to go through the hassle of slow, bureaucratic methods.
5. With online loans and alternative lending platforms, borrowers can apply for a loan anywhere, any time. Borrowers can get the loan irrespective of the lending bank being in their geography.