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How fintech lenders can earn their customers’ trust

Small loans of up to Rs 50,000 have grown 86 percent between March 2019 and March 2021 amid the proliferation of digital lenders. Apart from making credit easily accessible through technology, digital lenders must think about being transparent.

January 26, 2023 / 09:50 AM IST
The Reserve Bank of India has received over 1,000 complaints associated with unregulated and unregistered online lending apps.(Representative Image)

The Reserve Bank of India has received over 1,000 complaints associated with unregulated and unregistered online lending apps.(Representative Image)

The expedited adoption of technology in finance has disrupted the traditional lending space. As the economy moves towards digitalisation, entities in the digital lending space are leveraging lower processing costs and increased revenue per loan while reducing processing times for customers and widening their eligibility more than old-school banking institutions. This has brought many fundamental changes – cutting approval and disbursal times drastically.

The spread of the internet and smartphones has given an impetus to the digital lending root. These factors and the growing need for quick and small loans have led to the rise of digital platforms offering instantly approved personal loans. According to a study, small loans of up to Rs 50,000 grew 86 percent between March 2019 and March 2021 due to the increasing number of digital lenders.

Though digital lenders are overcoming barriers that once required loan applicants to go through several eligibility checks, building trust with them has become a critical concern. Since digital lenders are always behind the screen, they need to deliver value and loyalty at every stage of the loan process.

Promote ethical lending practices