Do you recall the days when you would have to submit a loan application and wait for days to get it approved? Sometimes even not having the required documents or knowing the process would have kept you from availing a loan. But now, thanks to digital lending apps, you do not have to face that anymore. You can apply for loans digitally and financial institutions can reach a wide customer base by offering services transcending traditional banking.
As of 2022, the total digital loan disbursement in India was valued at INR 21.6 lakh crore and is expected to reach a whopping INR 47.4 lakh crore by 2026, representing a CAGR of 22%. This shows that digital lending is at its ever-growing phase and is making its mark in the Indian economy. As the industry continues to evolve, so do the demands and expectations of lenders and borrowers, which makes digital lending platforms a necessity and not a trend.
As customers are transitioning rapidly into the digital age, the use of smartphones has increased significantly. This has resulted in a 40-60% jump in the purchase of digital loans. The digital lending market is set to become a $1.3 trillion industry by 2030, and what could contribute to that is the overwhelming number of personal loan apps currently in the market and the number of users actively taking loans.
The target audience for instant personal loan apps is primarily individuals or borrowers and the features offered should cater to their needs. However, even the best rated apps in the current market will always have a scope for improvement.
Hence, we will break down some of the key features every personal loan app should have, common positives that customers enjoy, and the negative aspects that need to be fixed or avoided when developing the app. Common customer reviews and suggestions observed from the Google Play Store are highlighted below for various lending apps: popular and not so popular.
A large number of reviewers have positively reviewed the user interfaces of every loan app.
Regarding security measures, even the best digital lending apps have seen mixed reviews in this aspect.
The performance and customer support reviews of the top personal loan apps leaned more towards the negative side.
Digital lending apps have received mixed reviews regarding the loan application, disbursement, and foreclosure processes.
Most apps have been negatively reviewed for charging high interest rates and processing fees, which has caused difficulties for some borrowers to settle their debts on time.
Customers who’ve reviewed the top personal loan apps have also given a few recommendations to improve the apps, some of which include:
Individuals or developers looking to go into the digital lending space need to understand the elements that make a successful lending app. The following criteria can be used as a benchmark for lending platforms to improve their services. Lending app developers can also look into the criteria and recommendations for building a good personal loan app that will stand out among the competition and provide the best of its services to borrowers.
Whether it’s a personal loan app or any other app for that matter, a simple and intuitive user interface can enhance user experiences and attract new customers, or in this case, borrowers.
Sometimes, despite completing the loan application process, there may be delays in receiving approvals. Borrowers need to understand the intricacies involved in the application process and the time taken to get them approved. Normally after completing a loan application process, the app analyzes the credit scores of the applicants and after an underwriting procedure, the loan may be approved or denied.
In case of non-approval or non-receipt of information, borrowers can follow an escalation matrix, contacting customer support and compliance heads and addressing their grievances. To prevent such concerns, application tracking facility should be implemented in digital lending apps so borrowers will be able to monitor its status at all times and make decisions accordingly in case of any issues.
For seamless application and disbursal of loans, customers can check if Loan Origination Systems have been implemented into the apps. They are built to automate and support the entire loan lifecycle, from application submission and approval to disbursement, complying with regulatory and internal requirements at the same time.
Besides offering the best loan services, app developers are also responsible to ensure that personal loan apps are compliant with digital lending guidelines. The guidelines are applicable to digital loans offered through any platform provided by banks and non-banking financial institutions. For starters, the RBI drafted a new framework that ensures borrowers have prior information about the potential lenders so they can make informed decisions.
An app with a proactive and dedicated customer support team who’ll be available 24/7 to take care of customer needs is crucial. Digital lending apps can crash often due to bugs or server issues and these issues can only be resolved by a highly responsive technical support that consistently monitors the app and performs bug fixes.
Safety and security in instant personal loan apps are crucial to protect the personal data of borrowers and prevent them from being scammed.
Currently, in the digital lending market, fraudulent applications that phish for personal documents or private user information are on a rapid rise and customers need to watch out for such apps. Prospective borrowers should look into all the security features provided by the app, such as advanced data encryption, multi-factor authentication, data minimization, etc.
According to a report by the Fintech Association for Consumer Empowerment (FACE), it was revealed that one-third of high-confidence customers in India had limited knowledge of their digital loans and had no idea on how to differentiate between illegal loan apps. This is also one of the banking industry’s pressing issues and customers need to verify the apps thoroughly and analyze their authenticity before installing them.
Quick personal loan apps offer a plethora of varying features, ranging from loan services to security features and much more.
Finally, user reviews and customer feedback are also critical towards choosing the best apps for instant personal loan. Going through the platform’s official website, testimonials, app store reviews, and verified review sites will give a comprehensive understanding of the app’s features, customer support, authenticity, etc.
App developers can also review customer feedback of multiple apps to gain a comprehensive understanding of what to do and not to do when developing the application.
As digital technologies continue to grow, the sheer increase in the number of digital lending platforms in the near future should not come as a surprise. Customers are actively looking to get hassle-free loans where the entire loan lifecycle is seamlessly managed, from the point of application to closure of the loan. For that, CloudBankin offers Loan Origination System and Loan Management Systems to streamline the entire process for borrowers and lenders, respectively.
Book a demo today for comprehensive insights into the platform’s capabilities and revolutionize lending for your borrowers
Rajeshware Srinivasan’s dialogue with Ms. Renuka Rathnahewage, Founding Director and
As COVID-19 wreaked havoc across industries in India in 2020,
Introduction Loan processing carried out in quick time provides competitive
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After smartphone penetration, people are not watching their SMS at all. They use SMS only for OTP related transactions. That’s it.
But What can a Lender see in your SMS after you consent to them?
Lender can see income, expenses, and any other Fixed Obligation like (EMIs/Credit Card).
1) Income – Parameters like Average Salary Credited, Stable Monthly inflows like Rent
2) Expenses – Average monthly debit card transactions, UPI Transactions, Monthly ATM Withdrawal Amount etc
3) Fixed Obligations – Loan payments have been made for the past few months, Credit card transactions.
It also tells the Lender the adverse incidents like
1) Missed Loan payments
2) Cheque bounces
3) Missed Bill Payments like EB, LPG gas bills.
4) POS transaction declines due to insufficient funds.
A massive chunk of data is available in our SMS (more than 700 data points), which helps Lender to make a credit decision.
An interesting insight on vehicle loans for lenders.
A trend we are seeing today – the first-hand vehicle ownership is decreasing with time. Why? People are upgrading their vehicles in every few years because of technological advances. And, this can be seen more with the millennial generation.
So, what should a lender do in terms of financing?
– Estimating the residual value of the vehicle at the start of the financing period.
– Charging a borrower only for the residual value (which is the difference between the value after a few years and the current value)
Example: A bike currently is INR 1 lakh. You want to buy the vehicle for 2 years. A lender will estimate the residual value of that bike today and what it would be after 2 years. If the estimated residual value = INR 45,000, the lender will charge you only that (say, INR 55,000 with interest for this instance) during your tenure.
At the end of 2-year period, you have 3 choices:
1. Return the bike and upgrade to a new one without going through the struggle of selling it.
2. Pay the lump sum remaining amount to own the vehicle outright.
3. Extend the financing and own it by keep paying the EMIs for the remaining amount of the vehicle for the next 12 or 18 months.
Benefits for the borrowers?
– Flexibility to use a vehicle and upgrade to a new one.
– Affordability to not pay for the complete value of the vehicle with the intention to use for a lesser amount of time.
– Convenience in owning the vehicle.
Say goodbye to the old lending option and embrace the new way of financing for vehicle by lenders!
How many of us know this?
1) Tiktok does Lending ( is it an entertainment company or social media company or a fintech company?
2) Youtube China does Lending
3) Top 100 internet companies in China(no matter what business they are in) do Lending
The team which was heading Lending in Tiktok was the Advertisement team. If we do Ads, we do X no of revenue. But if we do lending, we’ll get X+30% more revenue. This is on the same Ad spot.
Ad team has transformed into a lending team, and in today’s world, it’s possible because the subject matter expertise can be put in as an API and given to you.
Embedded Lending as a service is becoming popular in India too, and I am happy to be part of this ecosystem.
The answer is No. Only the top 10 crore people have access to many credit products in India. Almost all Banks focus on this market.
Once you go beyond that, the credit access rate has dropped significantly due to multiple factors.
1) Customers who are having low income(30-40K per month)
2) Not earning from an employer who belongs to Category A or B
3) Not from Tier 1 or 2 cities
NBFCs and Fintechs focus on the above segment, pushing another 10 crores of people.
But in India, 70 crores more people are formally or informally employed, which still needs to be tapped.