The idea of offering ‘right here, right now’ is becoming a key differentiator in various industries today. Instant gratification has become the norm, and customers today are reluctant to wait for days to borrow money or for transactions to complete. This has paved the way for instant loans in the era of instant gratification.
Customers demand speed and certainty, whether short-term finance or business loans, and turn to new-age fintech solutions to deliver faster lending.
In fact, India has the highest fintech adoption rate globally, and the fintech transaction value is set to grow from $66 Bn in 2019 to $138 Bn in 2023, at a CAGR of 20%.
Needless to say, customers are looking forward to accessing loans instantly so that funds get credited to their accounts immediately after they apply for a loan. This includes a seamless customer journey, faster underwriting, and an ideal turnaround time.
Why Streamlining Instant Loan Process Must be a Priority in Digital Lending
Since fintech firms have gained popularity in India, ‘instant loan’ has become an attractive mode of borrowing. Thanks to digitalisation that has skyrocketed the number of loans granted and decreased loan disbursement time, instant loans have become mainstream.
Therefore lending institutions should now focus on increasing system efficiency and accuracy and streamline their loan origination process to make instant loans real and fulfil customers’ expectations.
Using technology, analytics, and data, it is possible to mitigate the barriers that prolong loan disbursement and enable customers to access loans instantly.
Seven Key Elements to Streamline Instant Loan Origination to Disbursement Process
Here are some of the primary elements necessary to facilitate the instant loans process:
1. Standardise Internal Processes
The first step in enabling a streamlined instant lending process is defining and adopting a standard loan lifecycle model that best fits your business. Implementing a uniform set of procedures, setting a standard model of roles and responsibilities, and maintaining consistency across different digital channels are some of the important steps you ought to consider. This in turn ensures a higher level of regulatory compliance and sets the stage for loan processing.
2. Customer Experience
Making procedures customer-centric is a must to survive and thrive in a competitive market. This includes providing a seamless customer experience across all transactions, user-friendly interfaces to enquire and apply for loans, and educational materials to aid in navigation throughout the entire process.
Besides, the recommendation of loan products tailored to customers’ needs and personalised offers will take the customer experience to a whole new level. And, not to mention keeping customers informed about the status of the loan application at every step, which is critical to providing a positive experience.
3. Document Uploads
Simplifying document uploading and eliminating the need for uploads wherever possible can go a long way in giving a satisfying CX. The document uploading process can be simplified with instant KYC using the applicant’s Aadhar ID and eliminating redundant uploads of the same documents for pre-approved customers or loans of smaller amounts that require minimal checks.
Besides, having an intelligent KYC framework and a customised customer profile view, you instantly gather all the required information for decisive credit assessment.
4. Unique Credit Scoring Model
A critical impediment that tends to prolong the loan origination process is assessing the creditworthiness of the applicant. With manual data parsing and legacy systems, this step typically takes days to make a loan evaluation.
On the other hand, automated credit assessment tools with a unique scoring and rating model expedite credit assessment using multiple data points to predict the repayment success of the applicant finally.
In addition, the provision of an internal scoring model using pre-configured rules with a real-time and comprehensive rating can ensure limited process lead times.
5. Loan Eligibility Estimator
Implementing a lending eligibility estimator in the loan origination solution can instantly enable you to know whether the applicant qualifies for the loan. To create a wholesome view of the business/person being evaluated for a loan, the estimator should consider various data points across numerous transactions, bank account statements, financial parameters, GST, IT, and Credit Bureau data to create a wholesome view of the business/person being evaluated for a loan. As a result, this will facilitate an instant “time to yes” or rejection for a loan and accurately predict eligibility.
6. Digital Onboarding
The digital lending business model depends on UX, i.e. user experience and CX, i.e. customer experience, making it an instant favourite of salaried people and small businesses.
The application process should be simple, convenient, and reliable and loan decisions must be communicated to customers instantly based on basic eligibility estimations and checks.
7. Account Aggregator (AA) Framework
Lending institutions should have access to the AA ecosystem to process more loan applications in less time. This way, high-speed consumer data can easily be gathered from a verifiable source and help institutions maintain compliance. In addition, having access to the AA framework enables lenders to offer sachet loans based on cash flow quickly.
All in all, an agile and flexible loan origination system with innovative features can help lending institutions facilitate the instant loan process and delight customers. The key is to expedite loan turnaround time so that loans “time to yes” and “time to disbursement” are significantly reduced and meet the instant demands of customers.
With a clear vision of improving efficiencies of financial institutions, Finezza, an Indian Lending Lifecycle Management Platform, has developed an innovative loan origination solution to streamline instant loan processes. Finezza seamlessly integrates operations, risk management, and reducing complexities to ensure customer delight and enhanced business opportunities.