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The Evolution of Digital Lending Platforms

The Evolution of Digital Lending Platforms

The accelerated progression of technology and the amplifying reach of mobile and online banking options have positively influenced the popularity of digital lending in the last few years. To learn about the beginning of digital lending, you must look back at when the internet was still new and e-banking services were starting to unfold. Uncover more about digital lending and its evolution. 

A Brief on Digital Lending

Digital lending eliminates the need to visit a bank physically by offering financial loans and receiving funds via digital platforms that utilise data analysis and internet-based technology. As a revolutionary and innovative step for the lending industry, it makes the process for lenders and borrowers more comfortable and faster. 

You can utilise multiple digital channels like mobile applications, websites, or online portals for loan applications, repayment, approval, or disbursement. Digital lending is applicable for credit card loans, personal loans, lines of credit, invoice financing, etc. 

Digital Lending Timeline 

Today, the digital lending market is colossal. But how did it become so big? To understand how it reached this stage, let us look at the essential phases of development. 

  1. Dawn of The Internet: 

    In the late 1990s, the internet became more widespread, and financial entities tried their hands at e-banking services. This process was paper-based, demanding borrowers to visit the banks physically.

  2. Entry of Refined Platforms: 

    P2P lending platforms were transforming the market in the early 2000s. It enabled individuals to use online marketplaces to borrow or lend money from one another. 

    Later, in the mid-2000s, digital lending platforms started surfacing for personal loans and other credit services. These streamlined the loan application, loan approvals, and credit assessment processes. 

    The late 2000s witnessed the rise of mobile and smartphone internet, giving a platform to mobile lending applications. Thus, it allowed borrowers to process loan applications and oversee their accounts via mobile devices.

  3. Expanding Offerings & Fintech 

    The progressively growing landscape for digital lending saw several changes over the years. As additional participants gained access to the market, the existing players amplified their services with student and business loans. Digital landing took a more refined turn with alternative credit scoring and data analysis.

    Later, fintech became a popular concept to define the rise of tech-driven finance-related services such as digital lending. India also saw a boom in digital lending in the 2010s, with the market focusing on new banks, fintech startups, and NBFCs. 

  4. Further Technological Advancements

    This period saw continuous technological growth with the increased personalisation and accessibility of digital lending. Today, AI and ML are essential for forming decisions and evaluating credit risks. 

Digital Lending Perks

Digital lending platforms’ growing popularity is for numerous reasons. Following are some benefits that cater to its influential footing in the lending industry:

  1. Digital lending offers convenience by allowing borrowers to request loans from the comfort of their homes. 
  2. Modern online platforms reduce documentation requirements by underwriting borrowers according to alternative data.
  3. They ensure faster processing of loans and mitigate the time taken to disburse funds, analyse creditworthiness, and assess applications. 
  4. Digital lending offers reduced costs by cutting the paperwork and physical infrastructure requirements for lenders. 

Digital lending promises great things in the near future. These include personalised services, effectiveness, and financial inclusions. With new trends taking over digital lending, there will be many more stages to come that will further streamline the process for lenders and borrowers.

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