For decades, borrowing funds has been considered taboo. We go to great lengths to hide our debts from others. But as more people are going digital, things are gradually changing. The lending process is no longer complicated and mysterious. In fact, the concept of digital lending has taken a front seat.
Banks have now started offering securities digitally, reducing the loan disbursal time to a few minutes, unlike before, when it took several days.
Borrowing in numbers
India has close to one billion unique digital IDs, and more than 650 million mobile phone users; evidence of a huge shift towards digital platforms.
This shift towards a digital economy goes hand in hand with banking facilities. How? Digitisation makes it easy for customers to make transactions, track their bank accounts and funds, and even purchase financial products they want, right from their computers, smartphones or tablets.
What makes digital payments and loans a win-win situation?
Previously, the process to avail loans or even make manual EMI payments were not only tedious, but endless too. It often involved mounds of paperwork, lengthy application forms, reference checks, photocopies etc., all of which contributed to the complications of getting a loan.
Banks have realised that digitisation has been key to improving their distribution of Car Loans, Home Loans, Personal Loans, etc. Many positive trends have, therefore, emerged in the loan industry; one being an increase in the demand for loans.
How has digitisation boosted the loan industry?
There are several ways in which getting a loan has improved:
- A quick and easy to fill out ‘online application’ process
- Improved decision making, because all the information regarding loans is easily accessible
- No more queues to get signatures from bank managers
- Can find out loan eligibility immediately
- Can get the total loan amount and EMI amount even before taking a loan
- Loan disbursal happens in just a few days
Digitsation has also improved the method of making loan payments. Automation of payments through an individual’s bank account has proven to be a gift for both, customers and loan providers through Electronic Clearing System (ECS). Customers no longer worry about forgetting to make repayments and defaulting on their loans. Meanwhile, lenders do not have to worry about whether they will get their payments. With the ECS system EMIs are debited from the borrower’s bank account monthly, and the only thing borrowers need to ensure is that they have adequate funds in their accounts.
If a challenge lies anywhere, it is in choosing a safe and convenient digital payment option. Fortunately, even this has been addressed through data security. By adding a Secure Socket Layer (SSL), an encrypted link is created between sources, which ensures data that is passed remains private.
Apart from websites, consumers can now apply for loans through apps as well, which brings forth the concept of getting loans anywhere and anytime. For instance, the Tata Capital MyLoan app is one such product that helps consumers find the right loan or fix all loan related discrepancies. It is a boon to those struggling to reach the qualified credit score. This app allows individuals to not only find a suitable loan and apply for it then and there, but also allows them to extend their personal loans up to 1 lakh, based on their social media presence, online purchase behaviour, mobile data etc. Digitisation has left a significant mark on the loan industry. Transparency and high assurance of confidentiality are assured at all stages by banks and Non-Banking Financial Companies (NBFCs). With all these facilities on offer, it is no wonder that the loan industry is booming, and that it will continue to do so in the years to come.