Digital Lending could prove to be vital in the current crisis

Thanks to the existing pandemic related to the Coronavirus, the establishment of in-person and physical dispute resolution has come to a screeching halt and will remain likewise for some more time, at least. This has put focus on digital technology for dispute resolution.

Web-based Dispute Settlement Mechanism

Technology-based resolution processes that are rule-oriented and clear cut and known in legal circles as Online Dispute Resolution have very less human intervention. This has been made possible thanks to usage of technology such as Artificial Intelligence, Machine Learning, data analytics, and blockchain.

The utilisation of this mechanism is still at a nascent stage and has got a new lease of life in the last few months. This online redressal system can easily bring down resolution expenses to a large extent and offer implementable results in 45 days approx.

The legal machinery of ours has also accepted the online resolution system as a mandatory resolution mechanism by offering an easy and potent platform to everyone in the dispute in a contactless and secure way.

Small ticket borrowers and digital lending

Financial institutions are not really warming up to offering small ticket and formal credit score minus consumer segments. Subsequently it fell upon public sector undertakings and few of the local private players.

Consumers in droves have been very enthusiastic towards the modern digital lender notwithstanding the regulatory arbitrage being against them; to deploy theories such as cluster-based funding, point of sale lending, cash flow-oriented lending, and online microcredit. They have started utilizing advanced technology and other credit evaluation models to make up for the credit deficit and attract a large customer base.

Right time to deploy integrated digital solutions

The chances of an increase in the instances of disputes after this crisis are very high, so an online dispute resolution system could become crucial going forward. Its adoption will benefit the whole transaction process from credit evaluation to underwriting, from application to disbursal to gathering and from resolution to recovery.

With crises haunting the financial sector, the focus should be on deploying digital dispute resolution instantly. The lending institutions can keep a close watch the last mile as a result of wholly integrated digital solutions.

Conclusion

In the current crisis as a result of the pandemic, the objective should be to take into account disputes pertaining to Corona, especially in lending via online dispute resolution system, which goes a long way in making digital lending a success.