The future of credit against gold: Fintech Startups revolutionising digital lending against gold assets

The credit off-take of industrial borrowers dipped owing to the global pandemic but has gone up. Thanks to tech-driven financial platforms, lenders can now take the gold loan to a customer’s doorstep.

Lending in a technologically driven era has simplified the complexities of the tedious task of several days to minutes. While the transition to digital methods has been adopted by financial institutions right when the industry was on the cusp, credit also goes to new-age fintech startups that are revolutionizing the lending experience for borrowers.

Digital lending has streamlined almost all kinds of loans including loans against gold, which is intensely dependent on interest rates and secured collaterals. Gold assets remain a preferable savings option for most people as they can be liquidated easily at one’s convenience. Despite being the primary option, securing a loan against gold traditionally was difficult. The emergence of gold-tech startups has made borrowing against gold an easy and quick method with the complete financial security of the assets.

Besides offering quick disbursals of gold loans, the popularity of these fintech players is fuelled by their prompt turnaround time, customer-first approach and wider accessibility for borrowers, owing to their digital models.

Some of the key highlights on how digital lending of gold has been shaped over the years:

NBFCs and gold loans

For years, borrowers had to depend only on local vendors and conventional financial institutions to avail loans. While today, gold-tech platforms are fostering the entire process to ease borrowers with the availability of instant loans. These players are offering minimal paperwork, quicker processing times, doorstep services, lower interest rates, and security against gold assets. These digital methods have been helping borrowers in securing loans within minutes.

New-age fintech players and NBFCs proved to be a much-needed relief for borrowers who relied on unorganised lenders to avail gold loans. However, the lack of consumer convenience and flexibility kept borrowers away from organised and regulated lenders. Overcoming these challenges promptly, organised lenders in the past year have accounted for 35% of the market dominance in the gold loan segment.

Technology plays a vital role

Fintech players focus and invest more in technology adoption to smoothen the process for their borrowers, providing them with the finest, tech-driven seamless experience and borrowing facilities. The use of data-driven facilities also enables NBFCs to analyse and comprehend the borrower’s repayment capability.

Gold loan at the doorstep

The credit off-take of industrial borrowers dipped owing to the global pandemic but has gone up. Thanks to tech-driven financial platforms, lenders can now take the gold loan to a customer’s doorstep. This facility is offered to retail and wholesale banking customers alike. Through their branchless, virtual models, Fintech players provide fully automated verification, valuation and disbursals at the customer’s doorstep. Many of the borrowers wish to avoid a branch visit during the gold appraisal process. That is why a gold loan at the doorstep is preferred more by the customers.

Assured Security

An assurance of the safety of gold assets is a paramount factor for any customer. To ensure customers, tech-enabled gold-tech startups have stringent security procedures through reliable, privacy-sensitive digital networks. of the assets are cautiously sealed in packets that are numbered to avoid any discrepancy and can only be opened by the banking partners for audits. This not only safeguards the collateral of the customer but also helps in instilling the customer’s trust. They also conduct due diligence which includes extensive checks, real-time updates till the asset is delivered to the bank and follow intense procedures, such as e-KYC, verification, valuation among others.

Future of Gold loans

You can avail of a gold loan against an investment made in gold in digital format. Indicating a shift towards digital gold investments in India, this medium reduces the high risk of physically safeguarding the yellow metal

By integrating machine learning and large-scale data algorithm, accurate and quick underwriting is feasible at minimal costs. Such technological breakthroughs have unlocked new service segments, especially for the exposed metro, with tier 1 and 2 loans markets having significantly higher financial and technological knowledge.

Retail consumers in the gold segment in rural areas of the country will also look forward to adapting to the digital investment route in near future.

By Ankur Gupta, Founder and CEO, Ruptok Fintech

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