A Comprehensive Review of Digital Lending and Financial Performance in India’s Banking Sector
DOI:
https://doi.org/10.24113/ijoscience.v10i2.537Keywords:
Digital Lending, Financial Inclusion, Artificial Intelligence, Blockchain, Financial PerformanceAbstract
The digital lending market of India has undergone a fundamental change during the last few years, given that its growth pace is driven by catapulting strides in digital technologies and changing socio-economic dynamics. Advanced technologies have primarily fuelled this change of the credit delivery process, including artificial intelligence and machine learning, blockchain, and big data analytics that enabled wider accessibility while improving the operational efficiency of credit. It defines and redefines what a creditworthy entity is by using unorthodox data sources-transaction histories, utility payments, social media activity-and, therefore, expands financial services toward the underserved and excluded populations and pushes the world toward financial inclusion. Technologies like UPI, along with Aadhaar's adoption for biometric authentication, demystified financial transactions, reducing complexity in onboarding. Lending became faster, more transparent, and user-centric, which brought explosive growth to this sector. In terms of views, both startups and traditional institutions are aligned on customization, efficiency, and access to lending through these technologies. Still, the sector is still beset on several sides-from refusal to adapt to regulations to the danger of hacking. Data privacy issues, phishing, and the fraudulent literature remain a scourge for lenders and borrowers alike. Over-indebtedness and predatory practices also call for tighter controls on issues that might affect consumer interests. This paper analyzes the effect of digital lending on Indian banks and fintech companies' financial performance outcomes in terms of profitability, risk management, and operations. In addition, strategic importance of the collaboration between banks and fintech is stressed with an emphasis on a request for technology innovation and Omni channel strategy in ensuring competitiveness within more digitalized financial ecosystems.
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