State Bank of India, the country’s largest lender is all set to enter the digital lending space during the current financial year. As per a top official, the bank is set to embark on their new journey by targeting the housing, consumer, and small and medium enterprise segments that exist in the country. This comes as no surprise given that Rajnish Kumar, the ‘new’ chairman of State Bank of India had stated that digital platforms suit retail and SME loan products well, as they are generally parameterized. It needs to be mentioned that the country’s largest lender had last year launched pre-approved personal loan on the YONO app. This was introduced in the YONO app along with other facilities like Insta credit top-up on Xpress credit, overdraft facility for purchases made through e-commerce websites, and establishing an online customer acquisition solution. Given that, it is evident that the bank is working on widening its wings in the banking sector further.
The concept of digital lending is not a new idea as online lenders first emerged way back in the 1990s. Till date, there have been numerous waves of digital innovation within the industry both with regards to internal and customer-facing. However, with the advent of digitalization, the lending system in the country has seen a complete change.
Digital Lending, which ensures that the entire process of lending and borrowing is completed through electronic means was necessitated in the country as the process of applying for a loan was too lengthy earlier. Apart from being lengthy, it was time-consuming as well as involved a lot of stress for the applicant.
Digital Lending gave birth to a new class of companies, which are now known as ‘FinTech companies’. These companies combined financial services with the latest technologies and made the entire process of lending and borrowing an easy one for both lenders and borrowers.
Digital lending comes with many benefits. Some of them are mentioned below:
- Transparency in the lending process.
- Reasonable interest rates.
- Quick disbursal.
- Good security.
- Hassle-free processing.
Given the benefits offered, there is no surprise that digital lending has craved a place for itself in the banking landscape of the country.
With digital lending fast becoming the first-choice option of individuals when it comes to borrowing loans in the current scenario, SBI’s decision to enter the space can be termed as a ‘good one’. Rajnish Kumar, the chairman of SBI had stated that the bank is working on building an ecosystem which allows individuals to take a housing loan right up to the disbursement stage with the help of their smartphones.
As for retail loans, he maintained that the bank is putting more emphasis on getting its channel strategy right with regards to digital channels as well as alternative ones. Kumar, who went ahead and stated that retail would be a game of technology in the future boosted of SBI having a very wide footprint in the country. The SBI chairman emphasizing the importance of technology said that the bank was targeting to drive more value out of its huge customer base using data analytics and was hopeful that the bank’s entry into the digital lending space would be a fruitful one.
Given that SBI already has a network of 23,000 branches, 58,000 customer service points, and 5-crore internet banking customers, it would not be wrong to assume that it can have a ‘big impact’ on the digital lending space.
Author Bio: Ileana Lyardson is a content marketer and financial writer by day and a reader by night. She has 7 years of experience in the financial domain, predominantly in the Online Money Transfer. She is passionate about travelling and also maintains a blog where She offers financial advice especially on Banks IFSC CODE and review of insurance products to individuals planning their featured life.