Is the current digital lending process exciting to modern day users? | Blog

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The current lending systems have transformed the traditional lending process by making it easy and hassle-free. The borrowers appreciate the convenience and speed of accessing & processing loan applications across devices like phone, laptop, tabs etc. However, even though this process is convenient, hassle-free and safe compared to offline processes, there are two big dampeners in today’s digital lending process especially for a market like India.

1.    Is the end to end lending process truly digital?

The biggest pain point is that most of the processes partially runs through offline channels. The reasons for the process to hitch-hike through offline modes is due to challenges explained in my previous article. Because of this, the whole experience of digital is perforated by delays and discomforts for a digital user.

2.    Is the lending process inclusive?

The digital process is not inclusive because of lack of availability of data in terms of the credit scores and eKYC. The credit scores are available only based on PAN card, but less than 25% of total Indian population hold PAN cards which straight away rules out the remaining 75%. Even amongst the PAN card holders, some users do not have a credit history for instances students. Does absence or lack of certain data mean he/she isn’t creditworthy?

Leveraging alternate source of data will change the game

Financial institutions can leverage data, one for enabling straight-through processing of loans by utilizing specific fintech services performing certain functionalities and second for accessing information provided by third party services to assess creditworthiness. Financial institutions need a new age lending system which can orchestrate these functions utilizing alternative of data that can redefine the digital lending process for modern-day customers.