Digital Lending is a process through which quick loan disbursals could be achieved via an electronic medium. The process of digital lending is considered as one of the most effective, convenient, and faster ways to disburse loans in comparison to the conventional methods. Along with the maturing of the digital ecosystem and the use of analytics, automation, and blockchain, the lending financial institutions count more on algorithms and automated processes for approval and disbursal of loans.

The concept of digital lending has brought a number of powerful benefits for banks, including better decisions, improved customer experience, and significant cost savings. Also, it is a complex and challenging project. Lending has evolved from pawnbrokers lending money by taking collateral to be a more structured process involving banks and financial institutions. Because of the advancement of technological innovations, lending has gone through a sea of change, and it has turned digital.

To function more effectively, digital lenders are deploying technology. Often, they use AI and Machine Learning to improve the acquisition of customers and reduce costs. The incorporation of alternative data for credit underwriting and adopting complex risk management solutions have caused major improvement in lending activities. To add further, end to end automation means that there is less work to do learning new systems. Also, one can usually fill an application form that provides them a totally personalized funding decision, and when a business requires funding, this can be a lifesaver. Most of the credit card processors are now providing financing through digital lending platforms from their websites itself. Things are made easy for all merchants who are using their services.

A lot of things have changed due to the Covid-19 pandemic, especially, the way people do their work. Mainly, it has accelerated the adoption of digitization across the country. Making use of reports of an increase in digital payments, it is safe to say that digital mode of lending may also witness a boost, if not during the pandemic, then surely after the pandemic. Therefore, this way also its future looks very promising, and it is safe to say that this mode of lending is the future. One thing is for sure that digital lending is here to stay, but to ensure its success what is needed are stronger guard rails from both a legal and compliance perspective.

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