How to find a suitable digital lending business model

Digital Lending has recently grown to become an international financial phenomenon. The market for digital lending platforms is expected to grow from its current size of 5.1 billion dollars to 12.1 billion in the future years.

New marketplaces for novel ways of borrowing money have been created as a result of rising client expectations and needs. To increase productivity, save expenses, and attract more clients, more banks are looking to use digital lending. To learn how to discover an appropriate digital lending business model, please read the article from SMARTOSC Fintech.

Loan Market places

Users of this kind of digital lending business model can contrast loans offered by various banks and non-bank organizations. The platform’s inbuilt algorithms can link the borrowers with the appropriate lenders. Marketplaces for digital lending include Bank Bazaar, Paisa Bazaar, and others.

Online and Mobile lending platforms

This concept often entails a digital loan service provided via web or mobile platforms. The entire loan cycle is automated with the digital lending business model, from customer acquisition through loan distribution.

Peer to Peer lending

P2P lending, commonly referred to as peer-to-peer lending, is a digital lending concept that connects individual lenders or small lending businesses with potential borrowers. A P2P lending platform often does this by utilizing client profiles and data. 

P2P lending is typically less expensive than traditional financial institutions since it uses digital lending business model channels. Platforms for peer-to-peer lending include Faircent, i2ifunding, and others.

Supply chain Financing

These NBFCs, or non-banking financial institutions, lend money to retailers and wholesalers. Its goal is to hit a sizable number of businesses there that source their goods.

Line of Credit

The line of credit, which is a sort of revolving credit, enables the borrowers to draw from and repay the available cash. One illustration of a line of credit is MoneyTap. It frequently has an average interest rate between 15% and 17%. A line of credit can have a minimum maturity date of two months and a maximum of 36 months.

SME lending

Small- and medium-sized business loans are a sort of online financing service. It assists small businesses in resolving issues that arise throughout the course of loan applications. These issues include the introduction of new products, moving, hiring, and marketing, among others. Examples of this type of business strategy for digital lending are Farmart and Flexiloans.

Invoice financing

For micro, small, and medium enterprises, invoice finance is a short-term working capital facility based on their unpaid client bills. The digital lending business model is utilized to satisfy the micro, small, and medium enterprises’ short-term financial demands. They are able to accelerate their accounts receivables thanks to it.

Alternate Credit Scoring

This digital lending business model includes a wide range of credit scoring systems that employ algorithms to examine a variety of characteristics, including payment history, borrowing patterns, etc.

Banks that can satisfy the demands of various client expectations and respond to shifting market conditions would have an advantage over their rivals as they heavily invest in digital lending. Please get in touch with SMARTOSC Fintech if you want more information about the digital lending business model.