Abhay Bhutada - Digital Lending Reshaping NBFCs: A Glimpse into the Future

Digital Lending Reshaping NBFCs: A Glimpse into the Future

By Abhay Bhutada, Managing Director, Poonawalla Fincorp

A large section of people in India that was once ignored by the traditional banking industry can now avail financial assistance anytime, anywhere- all thanks to NBFCs! Financial assistance of such magnitude on a national level was possible only with the backing of digital tools and technologies. Rising use of smartphones, increased willingness to lend, seamless application processes and the rise of tech savvy Indians are also contributing to this growth.

Whether its growth loan desired by MSMEs or fulfilling the long-time desire of buying your own car, NBFCs have charted streamlined digital paths to avail credit on the tap of your phone screen. With digital lending, NBFC promises to provide better customer service, prompt superior decision making and shorten the turnaround time for loan applications and approval.

Let’s decode the scope, benefits and the strategy of digital lending and its impact on NBFCs!


Scope for digitization in NBFCs

Conventional NBFCs operating on traditional models face numerous challenges like longer lead generation and processing time, limited risk profiling, inefficient data governance, excess expenses of additional branches and people among others. Digitisation empowers NBFCs to solve these issues and build optimised operations based on credible data insights.

Along with the above structural improvements digitisation also helps NBFCs to build better customer relationships. Through digital medium activities of loan application, sanctioning and disbursement become streamlined for the customer, making borrowing easier, quick, and convenient. Digital tools also help NBFCs to connect to their customers with personalised messages in terms of loan bill payment reminders, sending statements to customers, etc. In turn, building better relations and customer journey.


Benefits of digitization for NBFCs

NBFCs have democratised credit access for everyone by using innovative digital technologies. This unlocks a series of benefits for both the borrower and the lender.

For the NBFC it reduces turnaround time, enables better risk mitigation measures, enhances its reach and increase in customer base, while the borrower gets access to more credit options, with valuable features like instant approval, quick disbursement, competitive interest rates, etc. By implementing digital tools, NBFCs can also keep up with their competitors and stay relevant in the business.

Digital lending in NBFCs will also protect businesses from unrestricted employment of third parties, problems such as exorbitant interest rates, unethical sales and recovery measures, data privacy violations, etc.


Striking the Right Balance of Digital and Human Element

Even though we are increasingly relying on technology through digital lending, a balance between technology and the human touch is still essential. Imagine a customer with poor connectivity who is not conversant with digital mediums and needs financial assistance. Such is the case with millions of people residing in rural India. Hence, physical branch presence becomes crucial to ensure credit availability for these people.

A simple e-branch operated by one company representative can spread the know-how on digital lending, extend credit to people while keeping the costs low for the NBFCs.

With a strong digital core, NBFCs have been evolving to better serve the customers, boost financial assistance and keep up with the changing times. With the integration of digitization, there is vast potential for the services this sector could provide, revolutionising how we borrow money through improved credit access, innovation and risk mitigation.