Digital Lending has gained popularity and relevance in today’s highly technology-dependent world. It enables financial institutions to provide services to consumers in swift, simple, and spontaneous ways. It has increased the accessibility for individuals and companies to avail financial services from the palm of their hands. Today, digital lending has grown into an increasingly popular medium, especially among younger demographics who prioritize convenience and flexibility in the services they avail.
The traditional methods of financial lending would often come across as intimidating at first thought. This is because the processes associated with them were complicated and time-consuming for the most part. It made it difficult for borrowers to obtain loans easily, causing great resistance in the overall process of sanctioning money.
All of these hassles were significantly eased with the introduction of digital lending. Simply put, borrowers could now accelerate the process of loaning money from the simplified application process to the ability to sign documents online. Digital lending would revolutionize the industry as a whole, with everyone involved being empowered in ways that traditional processes never could.
The recent years have been a turning point for digital lending in the fintech industry, especially in India. In 2022, India became one of the fastest-growing financial markets in the world. This came at the forefront of the technological boom in the country, which had several favourable results for the industry. To begin with, the volume of smartphone users made it easier for people to transition from manual to digital tasking. Supplementing this was a more affordable and accessible internet, allowing people to obtain information and make the best choice of services they needed. Furthermore, the Indian government has introduced several regulatory reforms and initiatives such as Aadhar and UPI. Because of this, digital lenders have operated more seamlessly and grown their business prospects.
The future of digital lending is expected to be highly influenced by newer technological advancements. Artificial Intelligence is the most significant, which can automate many parts of the lending process. It would also help improve the accuracy of lenders’ credit assessments, leading to more personalized and customized solutions. In addition to AI, blockchain technology is set to enhance the user experience regarding lending. This is expected to strengthen the security and transparency factors associated with the process.
In the future of digital lending, Business Rule Engines (BREs) will play a pivotal role in revolutionizing the lending industry. BREs bring automation, efficiency, and agility to the lending process by enabling lenders to define and enforce complex business rules in a dynamic and scalable manner. BREs also facilitate real-time decision-making, allowing lenders to process incoming data, apply relevant rules, and provide immediate loan approvals, interest rates, and terms. Furthermore, rule engines enable lenders to adapt to evolving regulations and market conditions by easily modifying and updating business rules, ensuring compliance and keeping up with changing industry requirements.
Besides technological improvements, digital lending can benefit from integrating traditional methods. The first step to achieving this is the collaboration between traditional banks and digital lenders. From the borrower’s point of view, several factors will contribute to the increased adoption of digital lending in finance. These include a rising per capita income across the population, a more inclusive financial ecosystem, a continuously growing digital population, and greater accessibility to the Internet, to name but a few.
