Novel Technologies and Collaboration with Traditional Fintech Companies Triggers Paradigm Shift In Digital Lending Ecosystem

Today Millennials and Gen-Z are buzzwords. No marketing strategy is complete without considering the mindset of millennials and what moves them emotionally and more importantly financially as they hold more than 60% of the world’s demography. Evidently, the Fintech industry is putting millennials’ best interests at heart and gigantic growth of the digital lending market is one of the outcomes. According to Allied Market Research, the digital lending platform market accounted for $4.79 billion in 2018 and is estimated to reach $19.88 billion, growing at a colossal CAGR of 19.6% during the period. The paradigm shift from traditional lending to digital lending and increase in adoption of cloud-based digital lending technologies are the major drivers for the market. Thus, several market players including HSBC and Fiserv have invested big bucks to develop novel digital lending platforms.

The ability to avail any kind of loans with just one click is the most tempting selling point for any digital lending marketplace. The developing countries are benefiting from this trend. In India, the total consumer debt was observed nearly half of the GDP in 2016, significantly higher than other leading economies. With the increasing adoption and inclination toward digital lending platforms, it is safe to say that this trend is here to stay.

How does digital lending platform work?

It is observed that about 5 million loans have been disbursed to MSMEs and individual borrowers with the help of digital lending platforms. This has made the loan lifecycle simpler for the quick-thinking generation. Although digital lending platforms require mere few minutes to decide and seconds to transfer money, it requires validation and support from regulatory bodies to work on a large scale. Moreover, these platforms have joined forces with innovative technologies such as artificial intelligence (AI) and machine learning capabilities, removing manual touch from the processes. Apart from this, the digital lending platforms are helping small businesses with finance, boosting the overall financial growth of the country.

Recently, the HSBC Bank USA, one of the largest banking and fintech organization, launched its digital lending platform, offering a simple way to apply for personal loans online. The platform is said to be powered by industry-leading end-to-end technology platform Amount. HSBC is leveraging Amount’s technologies and digital capabilities to meet the personal lending needs of more than 800,000 consumers. Moreover, with this new collaboration, customers can evaluate their loan options and send loan application more quickly and without hassle.

The seamless experience of adopting digital lending platforms are leading the market toward the exponential growth by filling the credit gap for both underserved borrowers. However, these platforms would not eradicate traditional lending ecosystems. Instead–similar to HSBC–they will partner and collaborate with other Fintech to develop more balanced and comprehensive lending infrastructure in the developing countries. The synergy between such platforms, traditional institutes, and novel technologies would open new opportunities in the coming future.

 

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