Lending is the backbone of any economy and has been the primary source of capital for businesses and individuals who have wanted to borrow money for ages. In recent years, however, traditional lenders have faced stiff competition from new digital lenders who offer their services through online platforms.
Fintechs have revolutionised lending by digitising the process of a loan application, assessment, and receiving timely payments once approved. As a result of the complete digitisation of the lending process and increasing digital lending demand by MSMEs, India’s digital lending market is estimated to reach USD 2507.55 Mn by 2027.
Now, the million-dollar question is – is your tech good enough to keep up with the demand? What features are instrumental in maintaining consistency in the credit approval process and portfolio management? That’s what we will discuss in detail in today’s article.
Below we have highlighted five essential features of digital lending platforms that can make loan verification and furnishing faster, easier, and error-free:
Five Essential Features of Digital Lending Platforms:
1. Data Security
It’s necessary to have an uncompromisable data security solution that can adapt to your business needs. This is why it tops our list of must-have features for modern digital lending platforms.
With the rise of cybercrime and breaches, data security should be at the top of any lender’s list when considering digital lending software. Data security protects lenders from hackers stealing their customers’ sensitive financial data. Consequently, it also helps you minimise the risk of fraud and identity theft, not to mention the loss of revenue from non-payment or chargebacks due to compromised accounts.
And every lender knows how valuable customer retention is for them. Therefore, having robust protection against cybercrime should be a key feature in your digital lending software so you can minimise these risks while keeping your customers happy and satisfied with a secure transaction experience.
2. An Efficient Financial Statement Analyser
An efficient financial statement analyser is one of the most critical features of a digital lending platform. In fact, in FY2022, a powerful financial statement analyser is more important than ever before, considering the rising number of loan defaulters since the pandemic and the economic crisis that soon followed. According to an RBI report, wilful defaults amounted to a staggering 60,414 cr. in FY2021-22.
As a direct response, lending companies have tightened their control over credit assessment. Analysing bank statements can make credit assessment and risk mitigation much easier for financial institutions. But scanning thousands of bank statements to rule out fraudulent transactions and other discrepancies can take a lot of time. And time is of the essence here.
On the bright side, a powerful bank statement analysis tool like Precisa can take the chore out of this behemoth task. Precisa analyses the transaction pattern and looks for anomalies to come up with a precise loan repayment probability score along with other data metrics, e.g. irregularity, cheque returns, business cash flow, and OD/CC utilisation.
It takes minutes to give you a complete picture of a business or platform’s financial profile, helping you ensure that the loan instalments are paid on time.
Like any bank statement analysis tool worth its salt, Precisa has several built-in security features to minimise errors. In short, integrating a state-of-the-art bank statement analyser into your digital lending platform can help you make the whole process much easier for lenders and borrowers.
3. Customisation
The ability to customise your digital lending software is essential. You can’t have a one-size-fits-all solution if you’re going to be able to meet all your customers’ needs. Customisation will allow you to tailor the back end of your platform to each customer’s unique needs and ensure that their data is protected, thereby increasing efficiency and reducing costs.
4. Customer-Friendly Processes
Applying for a loan should be as hassle-free and efficient as possible. This means your digital lending platform should allow users to complete their application from start to finish in less time than it takes to make a cup of coffee.
The process of repaying your loan should also be quick and easy, but there are additional steps you can take to make this part of the process less stressful for the users. For example, send emails to the borrowers, reminding them about upcoming payments a few days before the due date.
5. Regular Updates
In the fast-paced world of digital lending, it’s essential to keep up with trends and stay ahead of the curve. Digital lending platforms should be updated so that they can keep up with technology and other advancements in the industry.
With the help of cloud architecture, consistent updates at regular intervals are easier than before. Cloud architecture allows for regular updates and the ability to be flexible with the changes needed in the industry.
This can be done by having one software that processes all of your loans and then having an individual branch or office have its private server. This way, when there are updates, they can update their local server instead of waiting for everyone else to do it at once.
To Sum Up
The lending industry is constantly evolving, and so are the needs of lenders. New tools and technologies are being constantly developed to help fintechs better serve their customers while saving time, money and resources.
Lenders can ensure they’re taking advantage of the latest technology by choosing lending software with these key features.
It goes without saying that without proper risk management and automation, managing loans can be an absolute nightmare. Consider using a tool like Precisa to streamline the credit assessment and disbursal process by scanning bank statements in minutes without any error. A thorough analysis of bank statements can give you a complete picture of an individual’s or business’s financial health, thus helping you avoid irreversible blunders.
Mumbai