With digitization, FinTech has made it easier for people to apply for loans online

 With digitization, FinTech has made it easier for people to apply for loans online

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Tushar Aggarwal, Founder & CEO of StashFin, holds a BE in Electrical Engineering degree from Stony Brook University and a MBA degree from The Wharton School at the University of Pennsylvania. Prior to StashFin, he was an Executive Director at Everstone Capital, a private equity firm based out of New Delhi where he led the firm’s investments in Northern India across retail and financial services. His other board affiliations include Ritu Kumar, Sohanlal Commodities Management, and Transpose Logistics

The global population is now dependent on technology to an extent never seen before. And with the seemingly endless pandemic, there is certainly no halting this one-way trajectory we are on as tech takes over our lives. This activity has made its presence felt in the Fintech sector. With several FinTech companies flourishing, the lending and banking industry has undergone a sea change.

Undeniably, FinTech companies have revolutionized the way we borrow, right from the loan application process to the final disbursal. Loan applications these days are uncomplicated and brisk. FinTech companies do more than just verifying data; they derive their value from economies of scale. By leveraging tech, such as automating the underwriting procedure, they strive to fulfill the credit requirements of a gazillion people. This space is rightly called the instant loan space. Instant loans, as the name suggests, are personal loans that are credited instantly or within one or two working days owing to evolving technology and data analytics that have made processing faster.

Problems in the Traditional Lending System
Conventionally, assessing a borrower’s creditworthiness is a manual process, spanning over weeks or sometimes months. At times, potential borrowers find themselves entangled in a vicious loop of low credit scores and no loan allotment. FinTech companies aggregate large amounts of data into machine learning algorithms to make a credit decision in a couple of hours and assess your creditworthiness. Using the cloud, they have more data on the potential borrower than was formerly available. Our new-age lenders are adept at seamlessly gathering transactional data from multiple data sources. This data presents them with a picture of financial stability and creditworthiness faster. The outcome is deserving borrowers getting hassle-free and faster access to funds.

Lending FinTech startups in India
The Boston Consulting Group(BCG) states that more than 1,000 FinTech startups have been inaugurated in India over the last seven years. Between 2015 and Q1 2019, according to Inc42 DataLabs, the total investment in Indian FinTech lending startups was 25.49% ($1.94 Bn).

What makes FinTechs a sought-after choice for Instant Loans?

Online availability of the loans
FinTech companies offer personal loans online. Borrowers can simply visit the website or download the App and fill up the online application form. In the case of StashFin, a Credit Line Card with a credit limit of up to Rs 5 Lakh can be availed just by sharing some basic information. The same can be used for free ATM cash withdrawals, for online purchases, or swiped at any POS terminal, giving you 24/7 access to funds for any kind of emergencies or financial requirement.

Instant approval
On applying for a personal loan with a FinTech, you get an instantaneous approval or rejection pertaining to your eligibility and profile. These companies work on risk-assessment algorithms to minimize the risks. Some parameters that determine instant personal loan approval or rejection include age, income, current working organization, and credit score.

Digital verification
A fintech company with its digital application process also offers digital proof. Documents like income and residential documents are digitally verified.

Fast disbursal
As soon as your loan application gets approved, the desired loan amount will be disbursed within hours.

Apart from this, there’s so much more on offer for the borrowers. From flexible tenures and loan amounts to, in most cases, the lack of a need for collateral or security. FinTech companies have created quite a ripple in India’s lending space. Their impact on the underwriting process can’t go unseen. As they promise to evolve, they will efficaciously impact consumers’ access to quick cash loans or credit, thereby becoming a favored financing solution for decades to come.

(The author is a Founder & CEO of StashFin. The content of this article is his personal opinion)

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