The beginning of 2015 marked the start of the fintech disruption in India. Since then, over the past 6 years, the Indian fintech industry (primarily lending in the form of personal loans) has not only undergone immense disruption but has also started leveraging advanced technologies and techniques to better serve their customers, which has actively contributed to an increase in positive customer experience, as well as the advent of new customers who were earlier earmarked as unbanked.

The scale of this disruption can be accurately captured in the report published by Statista in collaboration with PPRC in March 2020. As can be witnessed from the graph below, the share of banked Indians have steadily increased over the years since 2017, and a promising catalyst behind this phenomenal change is the pioneering of fintech technology.

Source : Statista | Share of banked population in the Asia Pacific region from 2017 to 2020

So how is technology helping lenders across the length and breadth of India disburse financial instruments, such as quick personal loans, instantly?

Let us understand exactly that in today’s blog post.

What Are Instant Loans?

Before we begin to understand the technology which empowers lenders to disburse loans instantly, the first aspect we should focus our attention on is understanding the meaning of an instant loan.

In simple terms, an instant personal loans can be understood as a financial instrument, which you can leverage as a borrower to borrow a certain amount of funds, generally in the range of ₹10,000 to ₹500,000 and pay it back by using a flexible repayment plan. Most personal loans in India arrive with a number of features, which are generally absent from traditional loan offerings. Some of the most significant of them are as shared below.

a.  Instant Approval

As the name suggests, the most well-known feature of an instant personal loan is the quick approval it arrives with. Most lenders across the country guarantee a disbursement within 48 business hours, meaning, as the borrower, you will have access to the required funds when you need it the most.

In contrast, traditional loans generally take a while to process. If you have ever applied for a traditional loan in the past, you will be familiar with the process wherein you are required to manually fill out the application and subsequently wait for at least 1 business week for it to be assessed and the lender arriving at a decision.

Luckily, this is not the case with an instant personal loan.

b. 100% Paperless Process

Another loved feature of instant personal loans among borrowers is the 100% paperless process. These days, most lenders extend the feature of a completely online process to their borrowers, and these can be accessed either by visiting the lender’s official website or by simply downloading their smartphone application. One of the clear advantages of a truly online application process continues to remain the fact that borrowers can complete the application from literally anywhere around the world. All they need to have is, stable internet connectivity and an eligible device.

In contrast, a traditional loan mostly arrives with an offline application which needs to be completed manually. In our busy day to day lives, visiting the lender’s office and manually filling out an application is not only a tiring experience but also a difficult task as most of us are busy clearing out our endless schedules.

But how are lenders exactly leveraging this technology to offer such alluring benefits to borrowers?

The Technology Behind It All

As we shared in the introduction paragraph of this article, since 2015, there has been a continuous chain of disruption in the fintech industry, and some of the key areas where this development has occurred are the following.

●   Machine Learning

●   Artificial Intelligence

●   Smart Apis, And

●   Data Analytics

Modern lenders like Zavron leverage the above-mentioned technologies to serve their customers and are thus able to disburse loan applications at such a rapid pace. Let us understand this better.

Before the disruption of the Indian fintech industry, most lenders relied on legacy systems to process their customer requests, be it to process a loan application or a request for money transfer. One of the most pertinent challenges with a legacy system continues to be the fact that it warrants an additional amount of manual processing, generally in the form of manpower. To put this in perspective, just imagine how crazy the hiring spree in banks was in 2000 - 2010.

Now, while having additional manpower is mostly a blessing, it arrives with two bonus challenges, the first being human inefficiency and the second human error. You see, processing a 100 customer requests with a manforce of 20 is legitimate; however, once you extend the process to scale, the thin lines begin to crack and with it, arrives long processing times, inaccurate estimations, wrong calculations and much more.

In contrast, since the expansion of fintech technology, both financial and non-banking financial institutions are able to leverage advanced technology such as artificial intelligence and machine learning algorithms to better service customer requests. For instance, lenders these days regularly leverage machine learning algorithms to automate the mundane manual tasks involved in processing a personal loan application. Instead of relying on redundant manpower to manually process applications, lenders are now able to automate the entire process of assessing a borrower’s application. Right from accessing your credit history via open APIs from the credit rating agency to automatically ensuring the fulfilment of certain pre assigned criterias, these advanced algorithms can do a lot in a much lesser time.

Along with this, these days, lenders are able to leverage the power of stable internet connectivity among consumers to provide them with a completely online application process, meaning they can complete the application from the convenience of their homes without ever needing to step out.

In Conclusion

The exact mechanics of how lenders are able to leverage advanced fintech technology to disburse loans instantly may be complicated to understand; however, the advantages of these are clear. Right from instant approval to guaranteed disbursement within 48 hours and flexible repayment systems to competitive and personalized rates of interest, modern personal loans in India arrive with endless customization and consumer friendly features.

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