Digital lending has become widely popular since the beginning of the pandemic when banks and other financial institutions were under lockdown. Both startup fin-tech companies and large tech corporations were able to grow during this period. Even though the lockdown has been lifted and banks have started normally operating again, many people still prefer getting loans and credit from digital lending platforms. Here are the different lending models that customers can look out for.
Check out these different
digital lending models available on the market:
●
Online lending
applications: These digital lending platforms offer their services through
online channels or mobile applications. The entire process is digital and
automated on these lending applications. Thus, customers do not need the help
of any person and can follow the instructions mentioned in the lending
application to apply for a digital loan. Many startup fin-tech companies fall
in this category and they provide small loans to people for their needs.
●
P2P Platforms: These types
of digital lending platforms are more common in the market. A P2P digital
platform helps to connect the individual, who is looking to apply for a loan, with
the financial lending institution. The platform plays a key role as it becomes
a medium for both parties to engage with each other. These platforms also
provide additional services like credit risk assessment, payment options, recollection services, etc.
●
Social media and
e-commerce platforms: As digital lending became more popular, social media
applications and e-commerce platforms also introduced credit systems within
their frameworks. Although it was not their main business model, they used
their large networks and distribution channels to attract people to use their
lending and credit systems although their credit risk assessment and other
processes are similar to the online lending platforms.
●
Lender searching
platforms: One can also find digital platforms that are dedicated to helping
individuals get a suitable digital loan from the correct lenders. These
platforms use various algorithms and models on the individual's financial data
and then match them with the appropriate financial lending institution. The
platform generally charges a fee from both parties for providing this service.
● Mobile network money lenders: These digital lending platforms are similar to social media and e-commerce credit platforms. The mobile network company collaborates with a lending partner for giving out digital loans to its network users. The mobile network company provides this service to all its users where they can conduct transactions and apply for credit from the mobile network application.
● Supply chain lender: This lending method is available only to businesses and small companies. They can avail of a loan from their distributors for the purchase of required goods in advance. This helps them to avail goods for their inventory even if they lack some funds for the complete payment of the delivery. They should ensure that they pay back within the allotted timeframe or their next delivery of goods can be put on hold by the distributor. These are some of the different types of digital lending models available that provide credit to people and businesses.