Role Of Emerging Technologies In Lending And Loan Management In India

The economic reforms in India have changed the landscape of many industries since the last two decades. The Indian banking sector has had its fair share of emerging technologies which completely changed its functioning. Regardless of the risks involved in the government’s economic reforms planning, the lending and loan management system in India has been boosting.

On the other hand, the entire lending business in India has been under ‘a dramatic shift’ with a rising demand of customers for digital-first platforms for their lending and loan management purposes. Within a short period of time, this new generation of customers who prefer digital-first platforms will become the primary customer base for lending institutions.  

Consumers are rapidly incorporating technology in their lives driven by the growth in internet and mobile penetration, availability of low cost data plans and shift from offline to online commerce. The lending and loan management institutions in India have enabled access to a wide range of banking and fiscal services through different digital platforms.

Banks in India are putting in place robust foundations for digital structure and are instituting using digital technologies across all channels to deliver the power of speed and convenience to all clients. With lenders focusing on borrower’s requirements with an advanced approach along with leveraging omnichannel, these trends will bring in a modernist change and shape the lending landscape in India in 2022:-

End to end digitization: The most crucial aspect that will transform the lending and loan management system in India is digitization. There will be a gradual increase in the systems of lending organisations in the way they adapt to the digitization format. Digitization will improve the functioning of lending institutions that include customer information collection along with its organisation and analysis. Automation can be of great help for the existing employees in the financial institutions in India and increase their efficiency. Also, digital lending platforms will improve the loan servicing time for financial institutions. 

Integrated micro services: Loan management involves a lot of manual work and is a paper-intensive process. The need for accurate information makes the verification of documents, loan application to disbursal a laborious process. Lenders applying automation in their services will experience increased response time. An integrative microservice allows lenders to incorporate cloud-based microservices modules like CIBIL, statement analyzer, netbanking that acts as a one-step solution to disburse loans at a fast rate and also adapt to the regulatory requirements. 

Omnichannel capabilities: Digital lending processes are self-servicing in nature that eliminates the need for consumers to visit branch offices. From the very beginning of loan application to disbursal the manual intervention is almost none. Omnichannel service allows consumers to communicate with the lending institution as per their convenience of medium be it text or mobile app. Self serve portals will be the new game changer technology to make the lending process in India more customer-centric. 

Machine Learning and Artificial Intelligence: The growing and advanced machine learning and artificial intelligence has formed the core of fintech services in India. The financial institutions are incorporating ML and AI into multiple segments of lending and loan management operations. Lenders automate the most complex processes like credit score retrieval, fraud checking, loan application underwriting, and loan offer generation. 

Blockchain Technology: One of the most groundbreaking and emerging technologies for finances will be blockchain technology. It began around the cryptocurrencies but now is implemented gradually by financial institutions to make their processes more efficient and seamless. An encrypted and shared database or a distributed ledger makes the entire banking process transparent as it accelerates loan approval process, helps in tracking and managing loan applications, real-time data recovery, connecting the potential borrowers with private lending and financial institutions, and providing the borrowers with an overall control in order to manage their loans. 

In a nutshell

India’s banking Sector is currently valued at 1.31 US dollars and has the potential to become the third largest banking sector by the year 2025. The banks are reaching out to consumers for greater ease of communication through internet banking and mobile devices. The role of emerging technologies in lending and loan management systems in India has potentially increased and will lead to an increase in the revenue base of the overall Indian banking system. With that viewpoint, the lending Institutions will have to digitize loan cycles in order to compete well in the financial marketplace.