{"id":11355,"date":"2022-07-12T08:58:07","date_gmt":"2022-07-12T08:58:07","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=11355"},"modified":"2022-09-14T05:14:39","modified_gmt":"2022-09-14T05:14:39","slug":"digitalisation-in-loan-products-for-new-nbfcs","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/digitalisation-in-loan-products-for-new-nbfcs\/","title":{"rendered":"Advantages of digitalisation in loan products for new NBFCs"},"content":{"rendered":"\n<p class=\"has-drop-cap\">In order to keep up with the rampant change in\ntechnology, new advancements are being made in each sector. The financial\nsector has also adapted to the developments of these emerging technologies. In\nthis article, we shall focus on the Advantages of digitalisation in Loan\nproducts for New NBFCs.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a8fbf4e998\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a8fbf4e998\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/digitalisation-in-loan-products-for-new-nbfcs\/#NBFCs_and_the_switch_to_digitalisation\" title=\"NBFCs\nand the switch to digitalisation&nbsp;\">NBFCs\nand the switch to digitalisation&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/digitalisation-in-loan-products-for-new-nbfcs\/#Problems_faced_by_Traditional_NBFCs\" title=\"Problems\nfaced by Traditional NBFCs&nbsp;\">Problems\nfaced by Traditional NBFCs&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/digitalisation-in-loan-products-for-new-nbfcs\/#Advantages_of_Digitalisation_in_Loan_Products_for_New_NBFCs\" title=\"Advantages\nof Digitalisation in Loan Products for New NBFCs\">Advantages\nof Digitalisation in Loan Products for New NBFCs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/digitalisation-in-loan-products-for-new-nbfcs\/#Conclusion\" title=\"Conclusion:\">Conclusion:<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"NBFCs_and_the_switch_to_digitalisation\"><\/span>NBFCs\nand the switch to digitalisation&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In India, it\nhas been cumbersome for banks to provide full-fledged services to every nook\nand corner of the country. A wide variety of rules and regulations are imposed\non banks, making it difficult for them to reach a potentially large group of\nconsumers. Sometimes owing to different reasons, they are only able to provide\nlending services to a certain class of individuals- for example, people who\nhave collateral to obtain loans from the bank. NBFCs have been revolutionary in\nbeing able to gap this divide as they as an institution have been able to\nprovide credit to a larger population and with fewer requirements.&nbsp;<\/p>\n\n\n\n<p>In this era of digitalisation in Loan Products, NBFCs need to make that switch to reach a wider audience and seep deeper into the lending market. Today\u2019s consumers are technophiles, so to make the most of the opportunities, NBFCs must divulge into the cyber sphere. This shall not only provide them with the larger bandwidth of customers they are looking for, but it would also help them understand customer needs better and serve them quickly and hassle-free.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Problems_faced_by_Traditional_NBFCs\"><\/span>Problems\nfaced by Traditional NBFCs&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>NBFCs face\ncertain challenges in the traditional approach. A few of them are listed below:<\/p>\n\n\n\n<ul><li><strong>Manual filing and maintenance of\ndata<\/strong><\/li><\/ul>\n\n\n\n<p>NBFCs,\nwhen they operate physically, have to maintain a lot of paperwork. The entire\nprocess, from applying for a loan to verification of documents and finally\ngetting the approval, becomes time-consuming. While dealing with a large number\nof clients, this method is prone to a lot of errors as well. In order to deal\nwith the workload, numerous people need to be hired, which again dents the\ncompany\u2019s finances.<\/p>\n\n\n\n<ul><li><strong>Lack of Expansion Possibilities<\/strong><\/li><\/ul>\n\n\n\n<p>When\ndealing in a non-digital mode, an NBFC\u2019s growth becomes limited. They are\nconfined by various factors such as location, low clientele, limited products\netc. This hampers the potential profit the business could have made had it had\na digital presence.<\/p>\n\n\n\n<ul><li><strong>Lack of Customer Experiences<\/strong><\/li><\/ul>\n\n\n\n<p>Traditional\nNBFCs have a stringent approach while lending out loans. This unknowingly makes\nthem fall in line with banks. If NBFCs want to outgrow themselves, they must\ndeliver customised loan products as per the need of the customer. When NBFCs\noffer digitalisation in Loan Products, it can assist the user in obtaining a\nloan according to his needs.<\/p>\n\n\n\n<ul><li><strong>Sub-par customer experience<\/strong><\/li><\/ul>\n\n\n\n<p>NBFCs\ntarget a larger consumer base for lending than other financial institutions.\nWhile dealing with such a huge volume of consumers, it tends to be cumbersome\nfor them to offer top-notch customer services to everyone. However, if they go\ndigital, most of the work can be dealt with by AI &amp; bots, and better\nservices can be offered with minimum human intervention.<\/p>\n\n\n\n<ul><li><strong>Issues with debt Recovery<\/strong><\/li><\/ul>\n\n\n\n<p>Financial\ninstitutions always find it difficult to recover their debts. Effective debt\nrecovery strategies need to be introduced by NBFCs to minimise the risk of\nnon-repayment of debt. If NBFCs integrate fraud detection systems, tools to\nfind the frequency of default in payment based on past data. Then the risk in\ndebt recovery could be mitigated.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Advantages_of_Digitalisation_in_Loan_Products_for_New_NBFCs\"><\/span>Advantages\nof Digitalisation in Loan Products for New NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The following\nare the Advantages of&nbsp;<strong>Digitalisation in Loan Products<\/strong>&nbsp;for\nNew NBFCs<\/p>\n\n\n\n<ul><li><strong>Obtaining and managing Consumer Data<\/strong><\/li><\/ul>\n\n\n\n<p>At\npresent times banks are reluctant to lend loans to many people. The current\nsituation with the public sector banks has worsened as they try to ward off bad\nloans. This scenario gives NBFCs an elbow room to establish themselves. Through\ndigitalisation NBFCs can expand themselves. They can understand the needs of\ntheir customers and can assess and analyse this data to provide better services\nto them.<\/p>\n\n\n\n<ul><li><strong>Tailor-made Loan Products<\/strong><\/li><\/ul>\n\n\n\n<p>NBFCs\nneed to be creative with their loan products to maximise their reach. A customer\nbase is always attracted towards the products that have been customised for\nthem. With the digitalisation of loan products, NBFCs shall be able to deliver\ntailor-made products which the customer yearns for. Technology will also assist\nin providing a personalised, efficient customer dealing experience.<\/p>\n\n\n\n<ul><li><strong>Facilitate wider customer reach<\/strong><\/li><\/ul>\n\n\n\n<p>As we had discussed earlier, the number of internet users has shot up significantly. To have a more extensive consumer base, various entities in the <strong>financial sectors<\/strong><sup><a class=\"text-primary\" href=\"https:\/\/en.wikipedia.org\/wiki\/Financial_services\"><strong>[1]<\/strong><\/a><\/sup> have opted to have a serious digital presence. NBFCs will be able to make their services accessible to everyone, which shall be only a click away. It also brings all stakeholders, consumers, merchants and financial merchants together. The potential customer pool would be beneficial for all of them.<\/p>\n\n\n\n<ul><li><strong>Risk Reduction<\/strong><\/li><\/ul>\n\n\n\n<p>By\ninfusing technology into their services, NBFCs can have safer transaction\nmodes. This would save NBFCs time and make it easier for the customers to pay\nback the amount. It would also provide a safe, secure, transparent payment\ngateway for both parties.<\/p>\n\n\n\n<ul><li><strong>Enhanced Customer Service<\/strong><\/li><\/ul>\n\n\n\n<p>Irrespective\nof the sector, customer service should be something that is top-notch.\nTechnology would enable NBFCs to incorporate facilities such as text prompts,\nemail updates, query solving bots, delivery of E-bills, and Payment reminders.\nThis would improve the customer experience. The satisfied customers would lead\nto an influx of new customers through references.<\/p>\n\n\n\n<ul><li><strong>Cost reduction with digitalisation<\/strong><\/li><\/ul>\n\n\n\n<p>Technology facilitates the efficient utilisation of resources. NBFC digitalisation would reduce the requirement of manpower and would also enhance administrative efficacy. Once the<a href=\"https:\/\/swaritadvisors.com\/nbfc-registration\" class=\"text-primary\"><strong> NBFC Business<\/strong><\/a> is in automation, it shall significantly reduce the wastage of time and resources. Affordable and easily available technology solutions have made it easier for NBFCs to implement them into their services.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Traditional\nNBFCs had faced a dip in their business during the pandemic as they had less to\nno digital presence. In today\u2019s time, when there is a heavy dependence on\ntechnology, NBFCs must have digitalisation in their loan products. It will not\nonly help in market expansion but also save them a lot of money.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In order to keep up with the rampant change in technology, new advancements are being made in each sector. The financial sector has also adapted to the developments of these emerging technologies. In this article, we shall focus on the Advantages of digitalisation in Loan products for New NBFCs. NBFCs and the switch to digitalisation&nbsp; [&hellip;]<\/p>\n","protected":false},"author":12,"featured_media":11356,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[58],"tags":[1044],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/11355"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=11355"}],"version-history":[{"count":5,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/11355\/revisions"}],"predecessor-version":[{"id":11930,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/11355\/revisions\/11930"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/11356"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=11355"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=11355"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=11355"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}