As per the latest report on ‘Financial Inclusion’ by The World Bank, 2 billion people in the world still do not have access to formal financial services. This leaves a large population without any means to save money, receive loans or build their credit score.
However, this is changing with the advent of digital lending platforms that are making it easier for people to access short-term loans and other financial services online. In this blog post, we will explore how digital lending is bridging the gap towards global financial inclusion!
What is digital lending and why is it important for financial inclusion?
Digital lending is the process of obtaining a loan through an online platform. It has emerged as a faster and more convenient alternative to traditional methods such as visiting a bank or filling out complex paperwork.
By providing access to loans without the need for physical branches, digital lenders are making it easier for people in developing countries to obtain financial services. This is a critical step towards global financial inclusion, as it provides access to credit and other services to people who may not have otherwise had access to them.
Digital lending is also important because it helps build credit histories for people who do not have a formal credit score. This is a key factor in helping people gain access to traditional banking products and services in the future.
Digital lending platforms are also more efficient than traditional lenders, as they can process loan applications faster and with less paperwork. This helps to reduce the time it takes for people to receive their loans, which is critical in cases where people need money urgently.
What are the different types of digital lending?
Algernon Ronson of OakPark Financial classifies digital lending platforms and broadly categorized into three types:
– Peer-to-peer (PTP) lending platforms such as Zopa, Funding Circle and SocietyOne. These are online marketplaces where individual lenders and borrowers come together to make transactions with each other. The platform acts as an intermediary between them by facilitating the transaction and charging a fee for doing so.
– Crowdfunding platforms like Kickstarter and Indiegogo which allow people to raise money from others through donations or investments in exchange for rewards such as products, services or equity stakes. These platforms typically do not charge any fees but some may take a cut of the total amount raised if they are successful at meeting their funding goals.
– Online lenders like OakPark Financial which provide loans directly to individuals through an application process that takes place entirely over the internet without any paperwork required. These platforms are often used by borrowers who have bad credit history and therefore cannot qualify for traditional bank loans due to high risk factors associated with them being unlikely able repay the debt if they default on their payments.
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The benefits of using digital lending platforms for borrowers.
There are a number of benefits that borrowers can enjoy by using digital lending platforms:
– Ease of access: Borrowers can apply for a loan online anytime, anywhere without having to go through the hassle of visiting a bank or filling out complex paperwork.
– Speed: Loans can be processed and approved very quickly, often within minutes. This is critical in cases where people need money urgently for emergencies or other purposes.
– Convenience: All the information required to apply for a loan is typically available on the lender’s website, so there is no need to gather and submit multiple documents.
– Transparency: Borrowers can easily compare different lenders and their products to find the best deal for them.
– Flexibility: borrowers can choose to repay their loans over a period of time that is convenient for them.
The benefits of using digital lending platforms for lenders are similar to those enjoyed by borrowers, with the added benefit of increased access to credit markets. By expanding their customer base to include people who may not have been able to obtain loans from traditional lenders due to their credit history or other factors, digital lending platforms are helping bridge the gap towards financial inclusion.
The future of digital lending and its potential impact on the global economy.
The digital lending market is expected to continue growing at a rapid pace in coming years, driven by increasing demand for online financial services and the rise of new technologies like blockchain. This will result in more borrowers gaining access to credit markets, which can only be positive for both lenders as well as society at large due to greater economic activity and job creation.
In addition, the use of digital lending platforms is likely to result in increased financial stability due to reduced risk of default given the careful assessment of borrowers’ creditworthiness that takes place prior to granting them a loan. This will ultimately lead to a more financially inclusive world where everyone has access to affordable credit when they need it most.
To know more about Digital Loans and Online Loans, please visit our site https://oakparkfinancial.com/, we’d be delighted to be of service to you!