Technology and innovation are constantly helping create a better environment for financial institutions in India.
Modern NBFCs like Poonawalla Fincorp have digitised operations, which helps in reducing the loan process requests, with little to no paperwork. These advancements have enabled the financial industry to grow as a whole.
Even though these measures are meant to target tech-savvy millennials, digital processes are rapidly getting adopted by traditional financial institutions for better functioning and recordkeeping.
One benefit of digital lending for consumers is that loans can be approved faster. It takes a lot less time on digital platforms to check eligibility and sanction loans.
A significant benefit of digital lending processes for financial institutions is that they help save money on operating costs. These processes use technology to create business and functional models that don’t need much help from people.
1- Online Banking
We all know that in the past, banking was done physically. When customers wanted to withdraw money from their account or do anything else with their finances, they had to go to their local bank branch. People who couldn’t reach banks quickly had less access to the money or loans they intended to take.
But as online banking gains popularity, these physical branches are becoming less important. Consumers can do most things by touching a screen or pressing a button, like transferring money, setting up direct debits, applying for loans, or cash checks.
People are also drawn to online-only banks because of the convenience of experience. This has motivated traditional financial institutions to digitise their operations and get with the times.
2-EMI Calculator
Using an online EMI calculator, borrowers can get their amortisation schedule, which informs them about important things about their loan, including when to pay their Business Loan Interest rate. After each EMI, the schedule shows how much of the principal and interest is still owed. Having this information can help borrowers budget and think about making a partial prepayment. This information also allows borrowers to determine when to pay off their loan early and save on interest.
For Business Loans, borrowers can use a Business Loan EMI calculator – the quickest and most convenient way to figure out monthly payments. The borrower only needs to enter the relevant data to get the results without any effort.
3-Find the least expensive way to take care of your loan
The interest rate on a Personal or Business Loan can change how much a borrower has to pay each month. It is the main component of the loan that determines the amount of the instalment a borrower will have to pay every month.
As the interest rate goes up, so does the cost of borrowing money.
The monthly payment, called an EMI, is also based on how much money is borrowed and for how long. One can use a Business Loan EMI calculator or a Personal Loan interest calculator to determine how much one will pay each month.
4-New models for judging
Technology has made it easier to decide whether or not to give credit. Earlier, most traditional sources of loans were based on manual evaluation, which led to arbitrary decisions. Also, personal biases could make a good credit application get turned down. On the other hand, automation and the online process have made it possible to make a decision based on facts and can accurately calculate the risk and default factor.
Online verification is a great way to figure out a person’s credit score because it uses more data, like current income, job opportunities, recent credit history, and the ability to earn money, in addition to older credit history.
5- Information Evaluation
If a lending institution wants to find out about a borrower’s credit history, they can do so for free through several online resources. Since they can quickly process so much information, the decision on a loan is taken in as little as 24 hours. Realising this, traditional lending institutions are looking to speed up their risk assessment and the lending process by adopting digital technologies and innovations in the financial domain.
Conclusion
Technological advancements have significantly improved credit avenues and brought in more people to finance. Today, more people are applying for Personal Loans as the process is easier and faster than ever before.