The Digitisation of the Credit Market - Impact and Challenges

Digitisation has changed the way we live our lives and conduct transactions. The impact of this can be clearly seen in the credit market as well. People can now get loans with just a few clicks, and lenders can identify better opportunities without the need for physical visits by either of the parties.Let's delve deeper into how the digital wave impacts the way borrowers and lenders come together for mutual benefits.

Digitisation has opened the doorway for lenders to cross geographical boundaries that seemed impossible only a few decades ago. Lenders have been able to feed the credit-hungry market better, thanks to digitisation. From the evaluation of a borrower's creditworthiness to evaluating their eligibility, lenders, with the help of AI (Artificial Intelligence) and ML (Machine Learning), are able to process loans application faster and more accurately. This has helped lenders achieve operational efficiencies like never before.

With the lenders achieving operational efficiencies because of digitisation, borrowers have access to better interest rates and quicker loans. In fact, borrowers have been able to get loans within 24-hours of applying. Moreover, no longer does the borrower need to go to the office to submit their documents. e-KYC has helped in fastening the process and making it more convenient for all the parties involved. The loan application and disbursal process has been reduced to just a few hours from finding out their eligibility quickly to applying and even getting the disbursal.

With digitisation here to stay, one can safely say that the future looks bright. However, many challenges would need to be tackled by the lenders to ensure they can deliver on the promise. The safety and security of borrower's data, is going to be an important challenge. Another challenge of the digital wave impact will be the ever-changing consumer behaviour that is exposed to more information than ever before.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.