Digital Lending Market – Home Loans, Personal Loans, and More

If you are not online, either you live in caves or need to update. The digital age is here and going to stay part of our lives forever. People are doing almost everything online including weddings, strange but true. 

On the same cue, digital modes of availing home loans, personal loans and other loans have become a common way of applying and borrowing from leading banks and loan distributors in India. 

The online mode is simple, faster, saves time and money. With more focus on security and advanced tech-based solutions, you can assure of cyber-security too, a vital consideration, given dozens of ways hackers apply for financial frauds online.

Some facts about digital lending market in India and Globally

• The Government of India injected a booster package of USD 15 billion for financial services in February’21. 

• As per market experts, digital lending will reach 820 billion USD between 2021 to 2023. The significant share of this will lie within sub-prime, near-prime, and thin filer bands of borrowers for home loans, personal loans, and business loans

• Business lending digitally for the MSME sector between 2014 to 2020 has attracted around 2.4 billion USD.

• The SME and MSME sector are adopting the digital lending market aggressively, growing at a CAGR of 72 per cent between 2015 to 2019

• Globally, the size of the digital lending market is growing with a CAGR of 13.8 per cent. It will grow to 20.5 billion USD in 2026 from the current 10.7 billion USD in 2021.

Digital Lending Products

• Home Loans for a new apartment, home at builder’s project, home renovation etc. 

• Consumer Loans/Personal Loans for household appliances, goods, devices, and other personal requirements

• Credit Cards and other financial instruments

Factors Affecting Growth of Digital Lending Market

Technology

AI, ML, Chatbots and other technological advancements have made application, verification, and lending convenient. Technology helps borrowers and lenders in its own way. Banks and Financial Institutions use software for the complete life cycle of application and disbursal.

Security

Digital applications for home loans, personal loans, business loans, etc., come with the risk of cyber threats. With multilayer security of blockchain, you can rest assured of security about submitted information, documents for the loan processing.

Hassle-free Smooth process

You are sitting in your home, browsing on a laptop or smartphone and with a few taps on the keyboard, you applied for a home loan or personal loan. You do not have to visit the branch multiple times, stand in queues, and wait for days because lenders also offer instant loan approvals.

Digital mode provides a hassle-free smooth experience, saves time, money, and stressful situation in our busy life schedule. It is also correct marketing strategy when browsing and applying through smartphone is the ‘new normal’ of our generation.

Disbursal Time

Disbursal time has been reduced to as low as 24 hours to 48 hours from earlier around 15 days in offline lending.

Boon of e-KYC

e-KYC through Aadhar and PAN details has revolutionised the home loan and personal loan market online. Almost all the leading banks and financial institutions use e-KYC on their website and smartphone app to verify customers’ details, transactions, credit history online. e-KYC also helps in quick approval and processing.

The Pandemic

The pandemic led to an excellent growth of the digital lending market.

• We were under lockdown, and online was the only option

• Preference for social distancing

• Promotions and attractive interest rates by financial institutions 

• Government incentives and RBI push for more lending by Banks and Financial Institutions

Advantages of Digital Lending and Borrowing

Digital Documentation

One of the best advantages of the digital lending market is digital documentation. A borrower needs to scan and upload images, all within a couple of minutes. There is no need to visit a physical branch, carry a pile of documents, and submit hours of waiting.

In addition, as the world is advocating for a paper-free environment for a green future, digital lending is reducing our carbon footprint also.

Faster Disbursal of Loan Amount

Algorithm-based lending platforms analyse documents and verify much more faster than the traditional manual method. With faster verifications, lenders can disburse loan amounts within 24 to 48 hours.

Personal Loans for Urgent Requirements

Digitally you can apply for quick personal loans for urgent requirements such as weddings, festivals, vacations, etc.

Affordable Interest Rates

Banks and Financial Institutions provides affordable interest rates on personal loans and home loans online. They also offer offers and discounts to tap the crores of young Indians, hooked on their smartphone screens.

Transparent Loan Lifecycle

Lenders and borrowers can track loan lifecycle at every stage. Borrowers know the live status of their application, cause of rejection, repayment details etc. Digital lending makes the whole process of a loan transparent and smooth.

Challenges of the Digital Lending

• Internet penetration in India is fifty per cent as of 2020, despite several initiatives by Government for digital India and maximum internet user base.

• Financial literacy is still lagging in several countries. Only 24 per cent of the Indian population are aware of financial terms and products. 

• Indian internet bandwidth speed stands at 68th position globally with 60.06 Mbps download speed and 56.47 Mbps upload speed. 

Digital lending is the need of the hour. It is fast, smooth, convenient, and safe. You can log in from anywhere on earth and apply for a personal loan or a home loan. You can complete the loan cycle from application to disbursal to repayment, without visiting the branch.

Though there are some operational and on-ground challenges in India, there are outstanding prospects of the digital lending market in the coming years, given its numerous benefits. Join the revolution and apply for home loans and personal loans through digital mode only after comparing loan offers on online platforms such as Apna paisa.