SME is the small and medium enterprises that have come a long way and is now on the verge of the rise in the market. We should know how digital lending will transform the SME landscape. Earlier, SME was not known by many entrepreneurs or businessman who was new in the market due to which they were not able to start up a successful business. But after the introduction of SME’s, start-ups now have a chance to grow up and flourish in the market.
Small and medium Enterprises in India now are focussing on the benefits and power of digital lending for which they know for sure will profit them in future. With helping hands, loans and other many things, now they can focus and build their business and apply everything possible to grow their business and take it to the next level.
What is digital lending?
Digital lending is the type pf lending that is done through electronic means which does not require paperwork or in simpler terms, transactions are done through the online process or by digital means. For example, bank sells home loans, personal loans or other loans through digital channels such as Google, email, etc.
Digital lending sounds very unusual and a disruptive term to hear but then this term has been existing since three to four years back and now its roots have a strong hold on the market. There was a time where the lending was done with paperwork or going to places and following up many procedures that took time and usually people got tired of it. And now is the time, where digital lending takes over and makes work much easier as compared to earlier times.
According to Bain and Co. study from 2015, we concluded that most of the banks were just able to handle around 7 percent of products digitally end to end and that most of the customers of about 14 percent could submit the applications of loan process with the help of digital channels.
But then circumstances also states that many challenges and competitors in the market, who are armed with updated technology and innovations, have already started coming up and now are about to change about how the banking works – especially, focusing on the lending segment part which will help them further.
This aspect is certainly not limited to a boundary and certainly not happening in far-off corners in the entire world but covers most of the part which is not hard to recover or administer and now this is growing rapidly.
Lending gets a twist
Lending before had a different meaning than it has today. Especially the digital lending is taking over the market. Lending was first seen to be an exercise that was so into signatures, endless documentation, lot of procedures, complex regulatory, lengthy candidate assessment, manual labour and arduous risk profiling that even banks had difficulty doing the work and did not even imagine that the word “digital” would enter into the system so soon.
Digital lending came when they did not even have a hint of it entering into their system and making their work easier. After being done in a path-breaking and big way in Germany, Australia, The Netherlands and Poland, this digital lending is now setting up its hands in India that will slowly benefit the people of India.
What old era organizations were lacking out is now fulfilled by the newbies that are coming up. With the smart and clever use of technology and techniques, these newbies are bringing a lot of new things to the table by intricate processes. Analytics and data support is accessible that powers underwriting with the help of cross-channel. Use of both unstructured and structured data makes risk profiling easy and smooth. With the help of algorithms and smart tools, payment collections and monitoring are done much faster that requires less time. But when it comes to avail a small and quick loan, this digital lending can really work great as it consumes less time thus making less hectic for the people to get the loan in a quick way.
This is SME Playground
The players in this market are served with big and underserved segment market which they must struggle for it and then grow up gradually. And now these players are doing it efficiently and easily with complex loan strategies like SME and mortgage loans.
Technology does not only allow for just tapping interest classification, identification or unconventional sources of credibility but also reduces the need for human resources and strength in the documentation and follow-up procedures. Since there are more SME users in the market who are well equipped with mobility that can connect with their personal loan anywhere or anytime, it becomes easy for them to go for better.
There is a great scope for optimization of payments, revenue increase, and cross-selling when there is the wonderful use of technology. After the demonetization process, the country is now waking up to transactions which are usually cashless and therefore loans are also done in an easy and convenient way. This, in turn, improves the system of the loan and financial terms which is now getting to another level.
Digital lending is now covering up the market slowly but its impacts have already started showing its positive side which is a clear indicator that technology has now grown up to a certain level where its usage must be done in a right way. Digital lending has now no scope of going back and it may soon come to other banks also.