Artificial intelligence (AI) is transforming the lending industry by automating and enhancing various stages of the lending process. It is being applied to credit scoring, risk assessment, fraud detection, loan servicing and loan application processes. AI-powered algorithms can analyze vast amounts of data to provide more informed lending decisions, reduce costs and improve customer experience. Lenders can offer loans to a wider range of borrowers, assess the risk of lending, streamline loan application processes and automates the loan servicing. As AI technology evolves, we can expect even more personalized and customized lending solutions for customers.

Here are some statistics related to the Indian Digital Lending Ecosystem:

According to Experian, India's digital loan business was valued at USD 270 billion in 2022 and is predicted to reach USD 350 billion in 2023.

With rising digital lending companies in India, the country saw a CAGR of 39.5% over a ten-year period.

Compared to digital KYC, there has been a 40% decrease in manual KYC, an 85% cost reduction with the implementation of e-KYC, and numerous other benefits.

The Indian loan market saw a significant 11% growth in disbursements, reaching Rs 174 trillion in FY22 compared to Rs 11.4 trillion in FY17. Projections suggest that disbursements will continue to expand, reaching Rs 274 trillion in FY26 with a 12% annual growth rate, according to projections by Praxis Global Alliance analysis.

According to the Experian report, digital lending and digital spending present a significant potential in India, with a USD 800 billion digital consumer economy expected by 2030. This is a tenfold increase of over USD 90 billion in 2020.

Digitally engaged consumers who utilize fintech make up 52% of the adult population in India; of these, 36% of new credit customers as of FY22 came from fintech companies, 24% from NBFCs, and 22% from banks in 2022.

Digital Lending Lifecycle in India

Digital lending is the process of obtaining a loan through online channels, without the need to visit a physical bank or financial institution. This innovative approach has revolutionized the lending industry, making the process faster, easier and more convenient for both borrowers and lenders.

With the rise of digital lending, several advantages have emerged that have made it increasingly popular among borrowers. Here are some of the benefits of digital lending:

▶️Speed: Digital lending platforms have streamlined the loan application process, enabling borrowers to apply for loans and receive funds faster than traditional lending methods. This is because the entire process, from application to approval, is done online, eliminating the need for lengthy paperwork and in-person meetings.

▶️Convenience: Borrowers can apply for a loan from anywhere and at any time, as long as they have an internet connection. This makes it a convenient option for those who have busy schedules or live in remote areas where physical banks or lenders are not easily accessible.

▶️Accessibility: Digital lending has made it easier for people who may have been previously excluded from traditional lending methods, such as those with lower credit scores or those who are self-employed, to obtain loans. 

▶️Transparency: The loan terms and conditions are clearly stated on digital lending platforms, making it easier for borrowers to understand the terms of their loans. This transparency helps borrowers make informed decisions about their borrowing options.

Digital lending is gaining popularity due to its streamlined application and approval process, lower overhead costs and increased accessibility. These factors can result in lower interest rates and fees for borrowers. However, borrowers must be cautious when sharing personal and financial information online and should research any lender or platform before applying for a loan.

Despite potential risks, digital lending continues to make an impact on the lending industry.

Video Verification in Digital Lending

Video verification of the customer can be incorporated at various stages of the online loan lifecycle to enhance security and confirm the identity of the borrower. Here's how video verification can be integrated into different steps:

▶️Application Stage: After the borrower submits the online loan application, the lender can request a video verification session as part of the application process. The borrower will be asked to provide their consent and schedule a video call at a convenient time.

▶️Document Submission Stage: During the document submission process, the lender may require the borrower to upload scanned copies or images of their identification documents. In addition to this, the lender can ask the borrower to present the original documents during the video call for verification purposes. The borrower will be asked to display the documents clearly to the camera, allowing the lender to compare them with the submitted copies.

▶️Identity Verification Stage: Video verification can also be used for identity verification purposes. During the video call, the borrower will be asked to show their face clearly to the camera and perform specific actions, such as blinking or nodding, to ensure a live interaction. In some cases, a lender may require the borrower to sign a blank piece of paper while placing their original PAN card beside the signature. This helps verify that the person appearing in the video is the same individual as in the submitted documents.

▶️Biometric Verification Stage: In some cases, lenders may utilize biometric verification during the video call. This involves the borrower providing additional biometric data, such as fingerprint or facial recognition, to further validate their identity. The borrower may be asked to follow specific instructions during the video call to complete this verification process.

▶️Personal Information Confirmation Stage: During the video call, the lender can also use it as an opportunity to confirm the borrower's personal, employment and financial information. The borrower may be asked specific questions related to their application details, income, employment history or financial statements. This helps ensure that the information provided is accurate and reliable.

By incorporating video verification at various stages, lenders can enhance the authenticity of the loan application, minimize the risk of identity theft or fraud and build trust with their customers. It also provides an additional layer of security to mitigate potential risks associated with online loan transactions.

How the implementation of Artificial Intelligence &
Video KYC in Digital Lending is revolutionizing the financial sector

Artificial intelligence (AI) and Video KYC are playing a major role in the digital lending industry. AI is being used to automate various tasks in the lending process, such as credit scoring, fraud detection, and customer service. Video KYC is a process that allows lenders to verify a borrower's identity and address through a live video call. This helps to reduce fraud and speed up the lending process.

In recent years, the lending industry has seen a significant shift towards digitalization and AI and video KYC have been instrumental in facilitating this change. Here are some additional points to consider:

✅ AI-powered chatbots have become a popular customer service tool in the lending industry. They are available 24/7 and can handle a large volume of customer queries, reducing the need for human intervention.

✅ AI algorithms can analyze large volumes of data to provide accurate credit scores, making the lending process more efficient and reducing the risk of human error.

✅ Video KYC is not only a secure way to verify borrower identities but also enables lenders to offer loans to customers in remote areas, as long as they have access to a smartphone or computer.

✅ Video KYC can also help lenders to comply with regulatory requirements, such as the Prevention of Money Laundering Act (PMLA) in India, which mandates that financial institutions verify their customers' identities before offering services.

Overall, AI and video KYC are revolutionizing the lending industry, making it more efficient, secure, and accessible to a wider range of customers.

In addition to AI and video KYC, there are several other technological advancements that are making their way into the digital lending industry. Some of these include:

🔵 Blockchain technology: Blockchain is being used to create a more secure and transparent lending process. By using a decentralized ledger, lenders can verify a borrower's identity and creditworthiness without the need for intermediaries.

🔵 Machine learning: Machine learning algorithms are being used to analyze vast amounts of data to identify trends and patterns that can help lenders make more informed decisions. This can lead to more accurate credit scoring and better risk management.

As the digital lending industry continues to evolve, we can expect to see even more innovative technologies being developed to streamline the lending process and make it more accessible to borrowers.

Account Aggregators (AAs) have emerged as game-changer in the financial sector, simplifying and streamlining the process of accessing and managing financial information. With their innovative technology and secure infrastructure, account aggregators have made it incredibly easy for individuals and businesses to gather and share their financial data across multiple accounts and institutions.

✅ Consolidation of the Financial Data: Account aggregators act as intermediaries between individuals or businesses and financial institutions. They utilize sophisticated algorithms and application programming interfaces (APIs) to collect and consolidate financial data from various sources into a single platform. This consolidation eliminates the need for manual data entry and the hassle of accessing multiple accounts individually, making the process remarkably convenient.

✅ Streamlining Consent Management: One of the key features of account aggregators is their robust consent management system. Users have full control over their data and can grant permission to specific financial institutions or service providers to access their information. This streamlined consent management process ensures privacy and data security while simplifying the authorization process for users. It eliminates the need for repetitive consent procedures, saving time and effort for both consumers and financial institutions.

✅ Real - Time Data Updates: Account aggregators provide real-time updates of financial data, ensuring that users have access to the most recent information at all times. This instantaneous data synchronization allows individuals and businesses to make informed financial decisions promptly. Whether it's monitoring account balances, tracking expenses, or analyzing investment portfolios, account aggregators present users with up-to-date information effortlessly.

✅ Enhanced Financial Planning and Analysis: By consolidating financial data from multiple accounts and institutions, account aggregators enable users to gain a comprehensive view of their financial health. These platforms offer tools and features that assist in financial planning, budgeting, and analysis. Users can track their expenses, set financial goals, and receive personalized recommendations based on their spending patterns and financial objectives. The availability of such valuable insights empowers individuals and businesses to make better financial decisions and achieve their financial goals more efficiently.

Account Aggregator Ecosystem Enablement by CART
A Platform by Novel Patterns

✅ Improvised Customer Experience: Account aggregators have significantly enhanced the customer experience in the financial sector. They provide users with a user-friendly interface, intuitive navigation, and personalized dashboards that present information in a clear and visually appealing manner. The ease of accessing and managing financial data through a single platform eliminates the need for extensive paperwork, phone calls, or visiting physical branches. Account aggregators offer a seamless and convenient experience that saves time and effort for users, leading to higher customer satisfaction.

✅ Compliance and Security: Account aggregators operate under strict regulatory frameworks and adhere to robust security standards. They employ encryption techniques and secure data transmission protocols to ensure the confidentiality and integrity of users' financial information. The combination of compliance and security measures instills confidence in users, assuring them that their sensitive financial data is in safe hands.

AI, video KYC and account aggregators are improving digital lending by making the process more efficient, convenient, and inclusive, resulting in increased access to credit and boosting economic growth.

These are just a few benefits of how AI, video KYC and account aggregators are revolutionizing digital lending in India. As these technologies continue to develop, we can expect to see even more innovation in this space, which will make it even easier and more convenient for people to access the credit they need.

Case Study: How Novel Patterns Provides a Comprehensive Solution with
AI, Video KYC & Account Aggregator

In this case study, we delve into the transformative capabilities of a growing fintech company - Novel Patterns, an innovative platform that offers a holistic solution encompassing AI technology, Video KYC, and Account Aggregator services. By combining these cutting-edge features, Novel Patterns presents a seamless and efficient solution for businesses seeking enhanced security, streamlined customer verification, and simplified access to financial information. Let's explore how Novel Patterns has become the go-to choice as a comprehensive solution provider.

⚪ AI-powered Insights: Novel Patterns leverages the power of Artificial Intelligence (AI) to analyze vast amounts of data and extract meaningful insights. By employing advanced algorithms and machine learning techniques, Novel Patterns can identify patterns, detect anomalies, and generate predictive models to facilitate informed decision-making. These AI-driven insights enable businesses to optimize their operations, improve risk assessment, and enhance overall efficiency.

⚪ Simplified Account Aggregation: Novel Patterns simplifies the process of accessing and consolidating financial data through its Account Aggregator service. By securely integrating with various financial institutions, Novel Patterns enables businesses to gather comprehensive financial information from multiple accounts into a single unified platform. This consolidation not only saves time but also enhances data accuracy and provides businesses with a holistic view of their customers' financial profiles.

⚪ Video KYC Excellence: With the rise of digital transactions, the need for secure and reliable customer verification has become paramount. Novel Patterns incorporates Video KYC (Know Your Customer) solutions, providing an advanced and user-friendly verification process. Through secure video calls, businesses can authenticate customer identities, perform real-time verification checks, and comply with regulatory requirements. This streamlined Video KYC process ensures a seamless onboarding experience for customers while mitigating fraud risks.

⚪ Enhanced Security Measures: Security is a top priority for Novel Patterns. The platform implements robust encryption protocols and data protection measures to safeguard sensitive information. By adhering to industry best practices and complying with relevant regulations, Novel Patterns ensures the confidentiality and integrity of customer data. Businesses can trust the platform to maintain a secure environment for their operations and customer interactions.

⚪ Improved Customer Experience: Novel Patterns focuses on delivering an exceptional customer experience. With its user-friendly interface and intuitive design, businesses and customers can easily navigate the platform. The seamless integration of AI, Video KYC, and Account Aggregator services eliminates the need for multiple systems and simplifies the customer journey. This enhanced user experience fosters customer satisfaction and loyalty, driving business growth.

Conclusion

AI is revolutionizing the lending sector by automating and enhancing various aspects of the lending process. Credit scoring, fraud detection, and other stages of the lending lifecycle are being transformed through AI implementation, resulting in reduced costs, improved efficiency, and an enhanced customer experience.

In today's lending industry, Video KYC and personal discussion platforms are gaining popularity. These platforms enable lenders to remotely verify borrowers' identities and engage with them in real-time. However, it is crucial to prioritize data security and risk management when using AI in lending. Lenders must ensure the fairness and impartiality of their algorithms, as well as protect borrowers' information from unauthorized access.

A noteworthy case study of Novel Patterns exemplifies how AI-powered lending solutions can offer comprehensive benefits to both lenders and borrowers. By automating numerous lending tasks, lenders can minimize costs and enhance operational efficiency, while borrowers can enjoy a quicker and more streamlined lending process. The successful integration of AI into lending operations exemplifies the potential for significant improvements in the industry as a whole.