In the present scenario, the digital lending market has been expanding enormously. As lending is essentially about providing finance for business owners and individuals, the digital lending market is expected to continue its growth steadily, owing to the increasing use of digital technologies. It’s because now there are plenty of online lending platforms out there allowing people to avail of the loans online without letting them experience all those trials and tribulations people usually face in the conventional methods of applying for loans.

Talking about the rate of growth, as per the industry’s experts, it has been expected to grow from $10.7 billion to $20.5 billion in the next 5 years. The lending market is growing at the CAGR (Compound annual growth rate) of 13.8%

With that being said, let's now take a look at some of the factors that have led digital lending to significantly grow.

Cost Reduction

Helping to generate efficient ROI (return on investment), cost reduction has been one of the major factors in the growth of digital lending. And there is no denying that digital leading platforms have proven the same every now and then. Technology has helped businesses become more agile and mobile for individuals. Not only that, but it has also cut down the cost of customer acquisition and servicing of existing customers.
Better Customer Experience

Due to short-term and microloans, people with lower incomes are now able to build a good credit history as these loans don't let them fall into the debt trap. Since these loans come with lower interest rates, individuals are able to repay the amount conveniently. This is something that has contributed a lot in facilitating financial inclusion for the underbanked, allowing them to acquire loans from the comfort of their couch with minimal documentation and quick processing.

Post-COVID

Ever since the pandemic has hit the world, many things have changed. The number of internet users has been dramatically increased, which has led to more and more demand in digital lending platforms. Talking about the numbers, more than 130 million users came online and numbers are still counting.

So these were a few of the factors that have been contributing to the rising demand for online loans. There are a lot more factors to mention as well, these were only a few of them. Hope you found the information helpful.

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