What are the required developments needed in the Indian Digital Lending landscape to accelerate global growth in the coming years?
By Praveen Paulose, MD & CEO, Celusion Technologies
The Digital Lending landscape in India has been on a continuous growth tangent, especially in the past few years. Rapid digitization, significantly accelerated by the COVID-19 pandemic, has transformed digital lending in ways many could not foresee. This, accompanied by increased digital adoption, has led to a self-sustaining ecosystem in its growth and influence. And this will continue for years to come as people look for more convenience in handling their finances.
With all this being said, there is always room for more developments to improve the experience for both loan takers and lenders, especially in the context of essential factors such as customer safety, data privacy, protection from breaches, etc.
The Digital Lending landscape has its challenges, each of which has to be solved in a way that is well thought out to avoid future discrepancies. These challenges can not only get in the form of smooth company operations but may also cause inconveniences to customers if left unchecked.
At present, the regulatory framework of the digital lending landscape in India is still evolving. There is a need for clear and comprehensive regulations that strike the right balance between promoting innovation and safeguarding consumer interests & personal data. As the digital infrastructure in FinTech continues to get stronger, it is equally important to spread it wider. This means expanding its reach across areas that can also access these services, such rural areas, where people await better accessibility for digital lending. Greater accessibility also requires greater security, with customer data requiring proper protection. A robust credit data infrastructure is vital for reliable and accurate credit assessments. This will further improve data privacy for better credit risk evaluations.
The existing framework needs to be strengthened to expand the reach of digital lending services in India. This starts with developing a standardized infrastructure by creating a centralized database consolidating information from various financial sources. Next comes the implementation of alternative credit scoring models that can assess the creditworthiness of individuals looking to take loans. Digital lenders must also prioritize security to keep customers safe. Achieving this requires researching, understanding, and implementing the latest technological tools.
Above all, a collective effort towards increasing people’s financial literacy can go a long way in boosting the digital lending landscape in the country. This will empower borrowers to make better informed financial decisions. It will also help bridge the digital divide across regions with access to lending services and those without access.
Developing the Digital Lending landscape in India requires collaboration between regulators, industry participants, and technology providers. This can ensure a future where the landscape grows, improves, and eases various financial tasking & transactions.
