Loan loans in times of Covid-19



The global Covid-19 epidemic has caused disruptions in the way business is done in all industries. As the pandemic unfolded, digital technology gradually became the preferred mode of conducting operations. With the prevalence of health and safety, social distancing and remote working have become the norm. Thus, in all new transactions or business negotiations, the most delicate part has been the signing of documents because the physical signature has become redundant.

Due to social distancing standards and travel restrictions, the physical execution of documents has become impossible. An effective solution to overcome this challenge is the adoption of digital electronic contracts. In the current crisis, people without a credit card and without formal loan eligibility realize that they might need credit suddenly. As a result, they are turning to digital platforms to get loans from lenders.

Growth of digital loans

As the demand for credit increases, new challenges have arisen for lenders. The pandemic has resulted in job losses, pay cuts and time off. This has led to an increase in defaults, leaving lenders wary. As a result, many lenders have tightened lending standards. They made the underwriting process much more rigorous.

In addition, the moratorium on loan repayments could lead borrowers to expect relief. In this case, defaults and defaults may increase in the future, further affecting default rates. In this context, lenders will need to deploy digital tools such as artificial intelligence (AI) and data analytics to assess the risk profiles of potential borrowers. While new age lenders have already embraced digital tools, traditional lenders have yet to start using them.

To remain relevant, digital technologies have become essential. These technologies provide borrowers with a seamless and fast loan origination experience. They have improved the whole process, from the application to the closing of the loan. Digital loan processes enable fast loan disbursements, especially for smaller borrowers. Additionally, lenders can use analytics to periodically review customer data. In this way, they can follow the changes that occur in the risk profiles of borrowers. By using multiple alternative data points, lenders can create machine learning models. These models help them refine the credit rating of existing customers in real time. In doing so, they are able to maximize a client’s value and determine the amount to lend.

Digital lending offers benefits to both borrowers and lenders. This helps reduce the time and effort required to complete loan applications. In the long run, digital lending has the potential to increase lending volumes overall. In addition, outstanding loans can decrease effectively, unlike conventional loans. And it also lowers the cost of the loan.

Digital lending also allows for greater and faster scalability. In addition, by using digital tools in periodic reviews and due diligence of client risk profiles, lender risks are reduced. This allows lenders to better serve their clients. Through analysis, lenders can also assess the creditworthiness of new customers. In addition, customer satisfaction increases over time, improving the lender-borrower relationship.

Role of electronic contracts in digital lending

The Fintech innovation of the digital electronic contract has proven to be revolutionary. It has eliminated the shortcomings of using paper documents. Digital electronic contracts provide a better lending experience for everyone involved in the loan cycle: lender, dealer, and borrower. The modern loan process, by integrating electronic contracts, offers huge advantages over the traditional process. With digital electronic contracts, lenders are able to process loans quickly. They are also able to deliver documents in a timely and secure manner.

By integrating digital electronic contracts into loan origination, lenders are able to streamline processes, reduce inherent costs, and increase the likelihood of reserving loans. In particular, high volume lenders are able to save time and costs with every transaction made.

Digital electronic contracts also eliminate the security risks inherent in the paper loan origination process. These include the risks associated with signing signatories, regulating registrations and auditing processes.

Overall, digital electronic contracts provide a superior loan processing experience. Faster, smoother, and more transparent loan origination procedures have enabled lenders to respond to one of the most common complaints – reducing the time it takes to finance paperwork.


The global pandemic has acted as a catalyst for the growth of digital lending processes. Given the economic impact and the urgency to get back on the growth trajectory, digital lending has become a necessity. Loan origination is moving towards a fully digital process. The electronic contract plays a decisive role here. In addition, the market is becoming very competitive. Therefore, lenders seek to increase the efficiency of loans and develop their respective portfolios. To do this, they take advantage of the real added value of the integration of digital e-contracts.

The author, Shubhradeep Nandi, is co-founder and CEO of PiChain Labs. Opinions expressed are personal

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