Technology has been a real game-changer for the personal loan market with fintech firms enabling quick disbursals with minimum documentation.
Here are key trends we can witness in the personal loan market lately:
Lenders adopting new-age underwriting
Technology has eased business processes and created newer ways for consumers and financial firms to engage.
Zafar Imam, CEO, FinShell Pay told CNBC-TV18.com that the convenience of banking and payment access has further led to a positive impact on customers' borrowing habits.
“The sector has witnessed some substantial developments such as the adoption of new-age underwriting allowing lending institutions to use the latest data collection techniques such as borrowers' digital footprints, smartphone data, and other sources to get a better picture of their financial status and behavior."
Increasing preference for non-tier-I markets
Imam says growing coverage of the internet and smartphones have further increased the preference for digital lending channels in tier-II, tier-III, and tier-IV cities.
The users are able to browse and access the digital lending platforms and enjoy loan products even from a remote location.
Extensive range of loan products
There is an extensive range of loan products available now such as Instant PL in the form of credit line cards, checkout financing and running credit lines. In addition, use case-specific solutions have also been introduced to the personal loan market, said Imam.
Increasing demand for digital lending channels
With a growing and aspirational population, Raghuvir Gakhar, CEO at CashBean said that India is poised to undergo many digital revolutions to cater to the market.
“Especially being a young country where people are finding more things and activities for self-fulfillment. At the same time given the infrastructural challenges, not everyone has access to financial services in the traditional sense. Tier 2, Tier 3 cities don’t have physical banks or financial service offices always yet communication technology has penetrated deep into these areas too. Hence, the rise in digital lending is a function of both the aspiration and technology meeting at the right place and at the right time,” he said in an interaction with CNBC-TV18.
The rise of NBFCs
NBFCs are also playing a central role in creating this new financial space. This is also because the lending demand is also non-traditional these days.
“People are more than willing to supplement their needs through small-ticket loans and hence don’t want to go through the whole extended process of verification for such cases. Furthermore, NBFCs owing to their leadership and size are more nimble to cater to such requirements and create products that can be niche or wide,” Gakhar said.
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