The fintech world is expanding its horizons to the digital world. Technological innovations have largely boosted the growth of the BFSI sector, especially with digital lending. Digital lending is a process to offer loans online. You can apply for these loans using your laptops or smartphones over the internet. Every process of the loan lifecycle happens online, and hence, there is no need to visit a bank.

The digital lending market is spiking in India. With numerous benefits over the traditional lending process, people and businesses are opting for loans digitally. Moreover, an increasing number of banks offering loans using legacy systems are switching to digital lending. It’s safe to say that the future looks promising for digital lending.

Traditional lending, while still going strong, has many downsides when compared to digital lending. Credit seekers have to go through a long, tedious process to get their credit sanctioned. In contrast, digital lending allows a borrower to complete the process within minutes on their phone. The ease and fast turnaround time of digital lending is continually driving the transition to a bright new digital era in the BFSI sector.

But why exactly is this shift happening? Let us look at the key distinguishers of traditional lending and digital lending.

1. Ease -

Our world is moving towards simplicity and ease. For traditionally getting a loan, you would have to find a suitable bank, visit the branch, spend hours waiting in queues, complete a plethora of paperwork and submit numerous documents to the bank. And even going through all these hectic procedures, chances are you won’t get the credit you desire.

With digital lending, the process is simple and straightforward. Most of your personal and professional details are filled in by powerful auto-fill technologies that fetch data from various directories. A few eligibility checks, verifications, and you are good to go. The complete process can be done from the comfort of your home. How good an option digital lending is during times we are living in today with the pandemic still affecting lives.

2. Turnaround time -

Getting a loan sanctioned traditionally is a time-consuming process. Gathering all the documents, doing multiple branch visits, and even after the process is completed, the manual verifications take time. It can take weeks or even months to get money transferred to your account.

With digital lending, it typically takes only 2-5 days to get money transferred to your account. The process is swift given the use of advanced technologies for eligibility checks, verifications, and other processes. Such a fast turnaround time for getting a loan sanctioned is a boon for startups and small businesses.

3. Paperwork -

A traditional lending procedure requires you to submit a variety of proofs that can include your identity proofs, address proofs, employment documents, property documents, and whatnot. Carrying around so many important documents all the time is a hassle. Then there are other concerns about these documents going missing, which would be unwanted trouble.

As opposed to conventional lending, digital lending only requires a couple of fundamental proofs for granting the desired credit. And these documents can be scanned and uploaded, easy and hassle-free. Again this is a big factor why digital lending can be much more convenient.

4. Flexibility -

Another major difference between traditional lending and digital lending is the flexibility of credit offered to the borrowers. For Traditional lending, a loan of less than 1 lakh might be a risk factor. The eligibility criteria for conventional lending is quite narrow, which has young business owners, university students at a disadvantage.

When it comes to digital lending, many companies are willing to offer unsecured loans in the range of Rs 25,000 to Rs 5 lakh and even more, as per the creditworthiness of the borrower. This flexibility on the credit range is immensely beneficial for borrowers.

It is no puzzler that digital lending is a much better option to go for. With the rapid shift of banking operations to digital means, getting a loan is becoming easier. With emerging new-age technologies, the future of digital lending is bright. It is the perfect time for traditional lenders to upgrade their offerings to digital means and offer their customers an easy yet effective way to get loans using digital lending.

The author is the MD and CEO of Celusion Technologies