These cutting-edge technologies are transforming processes like credit assessment, disbursal and collection by making them more effective, accurate and inclusive.

The Indian digital lending industry is undergoing rapid growth led by a rise in demand for credit from several segments of the population, particularly the underserved and unbanked. According to reports, India’s largest digital lending market is expected to reach $515 billion by 2030 from $38.2 billion in 2021, with a CAGR of 33.5 %.

One of the critical enablers of growth is the adoption of AI and data science by digital lending platforms. These cutting-edge technologies are transforming processes like credit assessment, disbursal and collection by making them more effective, accurate and inclusive. Technological advancement has also impacted the gold loan industry by introducing efficiency and precision in a sector deeply rooted in Indian culture and economic fabric.

AI in credit assessment

Evaluating the creditworthiness of potential borrowers has become a concern in digital lending, mainly if they are new to borrowing or lack a credit history. The usual checking methods, like analysing the credit reports and bank statements, will not show the entire picture. Here, AI and data science come to the scene. Technology gets the help of social media, phones, online transactions, behavioural patterns and psychometric tests to comprehend more about a person’s money spending and predict their ability to repay a loan. AI and data science use techniques such as machine learning to observe all the information.

By integrating AI and data science with digital lending platforms, they can better decide who should get a loan. This means few will fail to repay the loans, more people get approval, and loans will be cheaper. Technology also makes the process swifter as they can monitor the information in real time without more paperwork.

AI in credit disbursement and collection

One of the significant challenges faced by the digital lending industry is the inefficiency and inconvenience of the credit disbursement and collection process. Usual methods of credit disbursal and collection, like cash cheques, bank transfers, etc., involve more operational costs, delays and risks of threats. AI and data science can assist in defeating the challenges by enabling digital and smooth ways of disbursing and collecting credit like mobile wallets, QR codes, UPI, etc.

By integrating AI and data science, digital lending platforms can offer more flexible and convenient credit disbursement and collection options. This enhances the customer experience, loyalty and retention. It also helps limit the operational costs, risks, and losses in the credit disbursement and collection process by reducing human intervention and errors.

Technology meets the gold loan industry

The gold loan industry now uses cutting-edge technology to meet customers’ continuously changing needs. AI and data science are transforming the gold loan processes more efficiently and smoothly. One of the significant AI applications in the industry is the loan amount estimation against gold assets. AI-based tools consider several elements like weight, purity, loan amount, duration and so on to offer customers information regarding the loan amount and interest that must be paid per month and year, assisting them in making informed and quick decisions.

Moreover, technologies like data analytics help lenders know customers’ needs, enabling them to build gold loan products that fit accordingly. Such a personalised approach satisfies customers and makes more of them loyal.

Furthermore, natural language processing is also used in the sector to enhance customer interaction. AI-powered chatbots and virtual assistants powered by NLP provide swift and personalised assistance to customers and make the processing of loans easier.

India

AI is changing the digital lending industry in India