Just about a decade ago, if you wanted to avail of banking services, you had to visit the branch. With the advancement in technology, most banking services have become available online. But when it comes to getting a loan, the process followed by banks is tedious and time-consuming.
On the other hand, banks pay substantially low interest on FD investments which are insufficient to cover you from inflation. In recent years, technology-powered fintech companies have devised a solution to this problem.
A fintech company provides a digital lending platform that acts as a marketplace where investors can directly lend to individuals without going through the process of manual paperwork. In return for the loan, investors receive monthly repayments that include both the principal and interest components. Investors can even reinvest this amount to earn compounding benefits.
It eliminates the need for intermediaries like banks and allows the investors to enjoy higher returns while providing access to easy loans for the borrowers. This blog emphasizes the benefits of using a digital loan platform.
What are the Benefits of Using a Digital Lending Platform?
While the basic difference between traditional banks and digital lending platforms is the use of technology to ease the process of peer-to-peer lending, there are multiple benefits of choosing digital lending sites. Let’s take a closer look at them.
Easy Registration Process
Supported by the latest technologies, digital lending websites allow investors and borrowers to create their accounts on the website instantly. With websites like LenDenClub, users can Sign Up using the website or mobile apps that are available on Android & iOS.
So, no more filling out lengthy forms and submitting bunches of photocopies. You can simply start investing with digital loan platforms within just a few clicks.
Consistent Decision Making
“To err is human”. You must have heard this common phrase which means that humans are bound to make mistakes. So, human decisions are prone to errors and biases. On the other hand, automated software that runs on Artificial Intelligence makes decisions with the help of pre-configured algorithms.
Unlike humans who might have biased judgments, the AI performs all the checks for creditworthiness and loan processes with consistency. At the same time, AIs can run all these checks in real-time, helping to expedite the loan process. As a result, digital lending platforms are more efficient and reliable.
Comfortable Access Across Devices
The millennials, or the GenZ, as they are popularly called, have grown with technology. Smartphones and mobile apps have provided technology-driven solutions for the service sector. Almost all services, including financial transactions in today’s world, are executed with the help of technology.
Hence, the integration of digital loan platforms across various devices is also very important. LenDenClub, one of the best digital lending platforms in India, allows its users to access the services across platforms through its websites and mobile apps available on both Android & iOS. Investors can register on the platform within just a few clicks to start their P2P investing journey.
Compliance with RBI Rules & Regulations
P2P businesses in India have to comply with the NBFC peer-to-peer lending (Reserve bank)Directions, 2017. Hence, all the digital lending platforms need to obtain an NBFC-P2P license from the RBI. Additionally, all the financial transactions have to be carried out by appointing a trustee who manages the transactions through an Escrow Account. This helps the business to ensure the safety of investors’ funds.
Not only this, but the regulations also expressly state the minimum capital requirements, the maximum loan that an investor can give to one borrower, etc. The digital platforms should follow all these guidelines that help in protecting the investors’ money.
Power of AI-Based Analytical Tools
Banks in India use credit reports issued by Credit Bureaus like CIBIL, Equifax, etc., to evaluate borrowers. While these reports show the credit history of the borrower, they are not sufficient to interpret the intent and habits of the borrowers.
Unlike banks, digital lending platforms like LenDenClub additionally use 200+ data points as a reference to evaluate the borrowers on various levels. This includes many parameters like the income and expenditure habits of the borrowers. Investing with LenDenClub helps you enjoy the benefit of advanced analytics and reduce your risk.
Most of the interest income is passed on to the investors giving them higher returns. With LenDenClub, investors can even earn up to 12% p.a. So a process that took weeks to execute manually, is completed within real-time on a digital lending platform. Not only this, but the management of the entire loan lifecycle is technology-driven. It saves time, money, and effort by enhancing the investors’ experience.
As we conclude the topic, you must have gained insight into the key advantages of choosing to invest with a digital lending platform. When you think of investing next,
Not only does it provide high returns, but also, conducts a thorough evaluation of the borrowers to reduce the risk of default. It also allows the investors to distribute their investment across multiple borrowers to help them diversify the risk. The default rate experienced by LenDenClub, the best digital lending platform in India is as low as 3-4%.