Hyderabad: With digitalisation of BFSI sector, lending operations have evolved considerably to facilitate easier discovery of loans and as well as a much simpler process of applying for loans and products like credit cards online.
The launch of India Stack by the government, eKYC, which allows financial companies to perform the Know Your Customer (KYC) verification process digitally using biometrics or mobile OTP, and eSign, which enables applicants to digitally sign and submit documents, have lent a considerable edge to the alternative lending segment.
Resultantly, digital marketplaces that connect credit-seekers and lenders are constantly enhancing the efficiency of the lending process by making it quick, seamless, and more importantly, paperless for consumers.
Advantages of paperless personal loans
With digital loans and alternative lending platforms, borrowers can apply for loans anywhere and at any time, irrespective of whether the bank that lends to them is present in their geography, says Anuj Kacker, Co Founder and Chief Operating Officer, MoneyTap
In addition, the absence of intermediaries makes online, paperless loans a much more dynamic and convenient option for borrowers who may have urgent financial requirements, since they are spared the hassle of undergoing slow and almost bureaucratic processes. At the same time, digitisation of end-to-end processes eliminates the chances of human error, as the processing of applications as well as credit underwriting is overseen with the help of technology.
In order to ensure greater accuracy in customising loan products for consumers, digital lending platforms employ AI and data analytics algorithms to perform a comprehensive analysis of the various loan products offered by lenders, such as banks and NBFCs, and correlate them to the specific requirements of borrowers to pick the most optimum product for them.
Anyone with access to internet and a computer or smartphone, and relevant government-approved identification like PAN card, Aadhaar and voter ID can apply for a loan online. Digital lending platforms have an online application process wherein borrowers can directly fill in their details and upload documents.
Borrowers simply need to scan and upload their personal documents such as address proof, identity proof, bank statements, and salary information online. This is a one-time process wherein lending platforms store the borrower’s information in a secure manner in a centralised database, which they can access when customers want to avail additional credit or other lending services. Automation and deep analytics have made verification of borrowers’ details as well as assessing their creditworthiness not only simpler and faster but also considerably more accurate than ever before.
As digital signature allows applicants to e-sign the documents, the entire transaction is paperless, thus saving them the trouble of downloading and filling a physical application and then forwarding it to the lender. Moreover, with paperless digital loans, borrowers also do not need to visit the bank. The entire process — from applying for credit to disbursal is conducted through digital channels.
So, while it usually took weeks, or even months, in the past for borrowers to have their personal loan applications approved through banks, instant loan approvals are finally a reality for credit-seekers who can receive the funds in their bank accounts in as little as 24 hours.