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Rapid advancements in technology have enabled the rise of Digital Lending which is, the provision of financial services and loans to individuals or businesses through digital platforms. Digital lending eliminates the need for traditional banks by using websites, online platforms, mobile apps, and digital technologies to facilitate loan applications, credit assessments, approvals, and disbursements. It connects borrowers with lenders, increases accessibility, and reduces processing time and costs. The wide-spread availability of mobile and internet services even in remote areas has expanded the reach of digital lending and promoted inclusivity of the population that did not have access to traditional financial services.

Another key factor that has led to the growth of digital lending globally is the increasing demand for credit. Also, the need for speed and convenience is necessitating the digitalization of financial services. In India in particular, the boost in digital lending can be attributed to the government’s push towards digitalization of the country and the creation of several digital transaction pathways such as the Unified Payments Interface (UPI).

Proliferation of data from varied sources and the development of advanced algorithms and analytics to harness insights from the data have vastly improved the security and robustness of digital lending services. Data analytics helps with 360-degree analyses based on factors such as the borrower’s financial data, repayment history, credit utilization, social behavior and more, for better credit assessment, risk management, and accuracy in loan decisions. This has in turn empowered lenders to accelerate the approval process and offer highly flexible terms and competitive interest rates.

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