How NBFCs Use Technology To Offer Competitive Lending Rates

Technology plays a significant role in the decision-making process for lending rates, particularly for small and medium-sized enterprise (SME) loans. Non-Banking Financial Companies (NBFCs) are using technology to offer low interest business loans to the small and medium enterprises. These companies have been quick to adopt new technologies in order to streamline their operations, keep business loans and  working capital loans interest rates’ low and provide more efficient services to the businesses. This has led to a more competitive lending environment, with NBFCs able to offer lower sme loans interest rates than traditional banks.

In the past, NBFCs had to rely on traditional methods of lending, such as manual processes, physical documents, and face-to-face interactions. This made the lending process slow and cumbersome, and often resulted in higher interest rates for customers. However, with the advent of technology, NBFCs are now able to digitize many of their processes and offer faster and more efficient lending services.

By leveraging technology, some of the key ways adopted by NBFCs to stay competitive are:

Online lending platform

One of the main ways that NBFCs are using technology to offer more attractive interest rates is through the use of digital platforms. These platforms allow customers to apply for loans online, and the process is often much quicker and more efficient than applying for a loan through a traditional bank. This is because the online application process is often automated, which means that the NBFC can process the application much faster than if it were done manually. Additionally, the use of online platforms allows customers to compare different loan options and rates, which helps them to find the best deal for their needs.

Data Analytics

Another way that NBFCs are using technology to offer more competitive lending rates is through the use of big data. These companies are able to analyze large amounts of data in order to identify patterns and trends with the help of credit scoring models that use a variety of data points to predict the likelihood that a borrower will repay a business loan. This further help them make better lending decisions and offer low interest business loans. For example, an NBFC may use data on a customer’s credit history, income, and employment status to determine their creditworthiness. This allows the NBFC to offer low working capital loan interest rate to customers who are considered low-risk, while also being able to charge higher rates to those who are considered high-risk.

Risk Management

NBFCs are also harnessing the power of technology to improve their risk management processes. This is done through the use of machine learning algorithms, which can help to identify patterns in the data that can indicate potential risks. For example, if an NBFC sees that a certain group of customers is consistently defaulting on their loans, it can use this information to adjust its lending policies and reduce the risk of future defaults.

Automation

Another way that NBFCs are leveraging technology to offer affordable interest rates is through the use of mobile apps. These apps allow customers to apply for business loan, track their loan status, and make payments from their mobile devices. This makes the process of applying for business loans much more convenient for customers, which can lead to more customers applying for business loans and working capital loans. Additionally, mobile apps can also be used to offer customers special promotions and discounts, which can help to attract more customers.

Blockchain

NBFCs are using technology to offer more attractive and competitive lending rates by using blockchain technology. Blockchain technology is a secure and transparent way of storing and sharing data, which can help to reduce the risk of fraud and other financial crimes. Additionally, blockchain technology can also be used to automate certain processes, such as loan approvals, which can help to speed up the process and make it more efficient.

Conclusion

NBFCs especially new-age fintech use advanced technology to offer more competitive interest rates to their customers. These companies are using online platforms, big data, machine learning algorithms, mobile apps, and blockchain technology to improve their operations and provide more efficient services to their customers. This has led to a more competitive lending environment, with NBFCs able to offer lower sme loans interest rates than traditional banks. As technology continues to advance, we can expect to see even more innovative solutions from new-age fintech platforms, which will benefit businesses and help to drive the growth of the lending market.