Transforming lending in India with Technology

The market size of digital lending stands at $200 billion in India as of September 2022. And this number has the potential to surge drastically as digitization is changing the lending game, especially after the Covid-19 pandemic.

The days of personal interaction for loan applications and eligibility checks are passé. Digital economy has removed these pain points and paved the way for seamless and customized lending. Simultaneously, the lenders have woken up to the fact that they need to respond to consumers’ demand for funds anytime, anywhere. Needless to say, technology has been a disruptor in banking and associated services.

How is the lending ecosystem evolving?

Ankur Handa, Co-Founder & CPO, Lentra says, “Technology has transformed the financial industry through innovative use of Open APIs and Embedded Finance. Banks are increasingly adopting technology and ecosystem partnerships to evolve from time-consuming and tedious traditional lending methods to faster loan approvals including the application processing time and disbursal. Using Open APIs, banks are mining from surrogate data such as tax returns, bank account analysers, payments history, etc. to accelerate credit decisions accurately. Starting from quick online approval to offering key details that could give lenders access to a wider credit report, Banks and FIs have opened up quicker alternatives for borrowers. Moreover, virtual operations have helped control the costs of servicing borrowers, which has infact been passed on to customers.”

Key tech trends driving the lending ecosystem transformation

“➔ An end-to-end ecosystem approach by banks partnering with technology service providers to digitise the entire lending journey is becoming the new normal

➔ Cloud combined with embedded finance is making credit availability affordable and geography agnostic. This has been a major boost for banks to reach millions of lives in the remotest of locations.”

➔ OpenAPI-based integrations are empowering banks to bring credit access closer to their customers, faster GTM, flexibility to use surrogate data as key indicators of customer risk profiles, and on-the-go credit decisioning

➔ Today, banks are driving financial inclusion across the spectrum by lending to individuals and businesses with timely, useful and affordable credit in a responsible and sustainable manner. All of this is powered by technology platforms that are enabling credit assessments, even for borrowers with zero credit history with them.” added Ankur Handa further

Technology helps banks and FIs in fighting fraud or bad debt                             

According to Statista, the RBI reported nearly 9,103 bank fraud cases in India in the financial year 2022.

Thankfully, the new tech tools allow banks and FIs to access data on the applicant’s financial status (with their permission) that determines their credit score, current income and expenditure. This aids in determining eligibility and credit limit. Various aspects of the customers’ profile are evaluated through big-data analytics and artificial intelligence tools which automatically determine a customer’s eligible loan amount by processing information from credit reports. Processes such as identity/income verification, and checking addresses to map lending risks are measured without human intervention quickly. It helps lenders make better decisions and fight frauds and bad debt.

New immersive technologies that help can banks drive delightful customer experiences

Technology has been a huge differentiator in the way banks serve their customers. With the advent of machine learning, artificial intelligence, chatbots, robotic process automation, and intelligent analytics, banks are bringing configurable workflows and user interfaces that add personalisation at the most granular levels of customer interaction with the bank.

Leveraging artificial intelligence, banks can deliver tailored omnichannel experiences rather than build mass products for large markets. Self-learning decision engines backed by AI and ML will help understand the existing customers’ credit profiles and assign them the best loan offers at the lowest rate possible. Disruptive AI technologies can dramatically improve banks’ ability to achieve four key outcomes which are higher profits, at-scale personalization, distinctive omnichannel experiences, and rapid innovation cycles. Banks need to build “banking stacks” that allow them to be a platform where customers and third-party service providers can connect to deliver a flexible and personalized experience through application program interfaces (API) platforms.


The banking sector is gearing up to attract the tech-savvy next generation with a variety of means including innovations like blockchain, AI, and IoT Financial technology that will keep adding more value to the processes.

Authored by –  Ankur Handa, Co-Founder & Chief Product Office, Lentra

Edited by : Tanmoy Mitra

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of ET Edge Insights, its management, or its members

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