Top 3 reasons why instant finance is emerging as the future of lending
The pandemic was a major accelerator in getting Indians on the digital mode of life. Once familiarised with the comforts of digital, there has since been no looking back for them. Rather they are looking at taking more and more of their daily tasks digitally. In the wake of this, fintech firms have seen a steep rise in popularity. This can be attributed to how innovatively the fintech industry has leveraged technology to enhance access, affordability, and engagement with customers.
Not only have fintechs done away with the limitations of traditional banking and finance, it is also consistently bridging gaps for the under- and unbanked, helping bring these segments into the Indian financial mainstream. No longer does the average Indian, no matter what the socio-economic background, have to be wary of having a well-established credit footprint, the ready availability of long paper trails, or even their presence at the banks.
With increasingly fleeting lifestyles, there is no better service USP than the convenience of ‘instant’. Within the personal finance and borrowing ecosystem, for example, instant finance has been embraced with open arms by the initiated and the uninitiated Indian alike. According to the Founder & CEO of Qbera, Aditya Kumar, quoted in a Zee Business article, instant loans have become so popular that they’ve even, to a fair degree, overshadowed the popularity of credit cards.
Instant finance is becoming a go-to option simply because the ecosystem and how it operates are founded on the purpose of addressing long-standing customer pain points in the banking and finance industry. Pain points that have excluded multiple customer segments from availing traditional banking services.
Here’s looking at some key reasons that have made instant online finance a game-changer in India.
Emergencies never come knocking, which means proactive actioning of service requests goes a long way. Traditional banking is still largely manual, which means application, processing, approval, and disbursals can take days to end. How useful would that be when the need of the hour is sudden, unplanned, and immediate? The power of technology has enabled lightning-fast evaluation of key factors like creditworthiness, repayment capacities, and schedules, as well as sanctions to ensure instant cash finance.
The procedures are also completely paperless with most players offering the provision of uploading KYC documents, salary slips, and bank statements, among others online in the form of mobile camera photos or digital scans. The documents are verified digitally within the same day, following which a customized loan offer is drawn up for you. Reading this offer document carefully will give you adequate information on the sanctioned loan amount, the applicable interest rate on your loan, and other fees and charges
Tenures tailored to the capacity
With instant micro-loans, choosing loan tenures are also a customer prerogative. Typically tenures on instant personal loans can stretch up to 5 years. This is ideal for customers with existing credit accounts looking to consolidate their debts. You can opt for a longer-tenure, lower-EMI scheme that will suit the customer’s repayment capacity. Alternatively, if a customer is seeking instant finance for a one-off, unforeseen need and does not want it to take up space on their credit history for long can choose an extremely brief tenure as well.
Deeper engagement and online account management
Most instant finance apps and players come with an anytime and anywhere proposition. This applies beyond applications or disbursals. Dedicated online portals and 24×7 chat options on app, among others, make the service even more reliable and responsive. They are a tap away at all times and all days of the week, unaffected by weekends and holidays in contrast to banking institutions.
These fintech players are also doubling down on marketing, trying to engage the potential and existing customers before, during, and after the lifecycle of engagement meaningfully. This is ensuring top-of-the-mind recall, while regular offers, discounts on application fees, and communication are helping keep customers in the know. For instance, SmartCoin offers gold rewards on loan applications from time to time.
The closing note
India is getting more and more used to living on their smartphones. Recent RBI data suggests that they are also warming up to the idea of using instant personal loans as a helpful way of managing expenses. Millennials remain largely a group of people who value experiences over things, and borrowing a focused amount to take care of immediate expenses will only become more widespread. With the reality of living with credit gaining greater acceptance, the instant finance ecosystem is likely to grow exponentially over the next few years.