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Digital Money Lenders Must Focus on Quality of Services to Retain Customers Digital lenders will have to continue to do more to ensure that customers develop trust and comfort towards their services

By Sayali Karanjkar

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Digital lenders are bringing about much needed innovation in the otherwise traditional consumer lending industry. This is partly due to the incumbents' limited reach to underserved consumers and inflexibility in loan ticket sizes and tenures. Digital lenders are able to cater to a new class of underserved borrowers by deploying alternative means of underwriting and ascertain the creditworthiness of the borrowers.

A host of data points such as social affinity, digital footprint, spend behaviour are processed by their data analytics tools. Reliance on technology as against human judgement makes the underwriting process automatic and unbiased. This makes loan approval decisions instant. What could take weeks for a bank, a digital lender is able to collapse the entire loan application process, right from assessment to disbursal, to under a day! The speed, ease and convenience of digital lenders not just attracts first time borrowers, but also regulars.

However, digital lenders face their own set of challenges. For instance, most Indians are used to having human intervention in money-related matters. Customers are sceptical in sharing their personal and financial/bank information over a digital interface to a relatively new digital company. Moreover, customers often struggle to obtain the necessary documents to move through the process. Digital Lenders also need to alleviate borrowers' concerns around repayments, late penalties if any and the impact on their credit scores.

Digital lenders will have to continue to do more to ensure that customers develop trust and comfort towards their services. First time borrowers may not be familiar with workings of interest rates, credit score or for that matter, what loan tenure would suit them the best. A Digital lender could look at its relationship with the customer as more advisory than transactional. This could help build trust.

Second, the loan application process on the smartphone needs to be intuitive and convenient. Clear communication with the customer at each point in the application journey along with real time assistance and updates could the borrower feel at ease. Additionally, transparency in interest rates, repayment options and any penalties is important. Simplicity, clarity and transparency are our tenets for the same reason. We provide this through our journey on app and our customer support, leading to long term trust building.

Personalisation in terms of flexible repayment options and tenures could go a long way in retaining customers. We can only this with high quality precise systems. Understanding the life-stage of the customer and her unique requirement at that stage is important in developing the capability to offer this flexibility. For instance, a young professional enrolling himself for a one year classroom course would prefer a moratorium period, instead of the regular EMI repayment. Or he may make interest-only payments for the duration of the course.

To retain customers, digital lenders must provide their customers a superlative subsequent loan experience. No more than a click of a button should be required to avail a second loan for a customer who has shown good repayment behaviour.

As digital technologies become commoditized, a quick and convenient process will be table stakes. Digital lenders will have to evolve to strengthen their relationship with the customer by offering personalised services.

Sayali Karanjkar

Founder, Paysense

Sayali Karanjkar has spent more than 14 years in the US and Singapore, working in operational and strategic consultative roles in large corporations (AT&T and ATKearney) in the US. The vitality of modern India and her passion to build best in class products for the underserved Indian consumer brought her back home. She has been focused on building trustworthy and transparent products that can be game changers for consumers' growing aspirations. Most recently, she was a co-founder at Outsy, a local event curator, and a business development lead with a behavioral science firm, Final Mile. Sayali holds an MBA from the Kellogg School of Management, a Masters in Engineering Management from Northwestern University and a Bachelors in Computer Science from National University of Singapore

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