There's hardly an industry left unaffected by disruption the new-age businesses are bringing. And, the end consumers have emerged as one of the biggest beneficiaries of this change as they get easier access to more options and better services at more competitive prices. One such example would be that of borrowers who have gained from the emergence of new platforms which have intensified the competition among the financial service providers.

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Loan origination or rather, quality loan origination has always been a challenge to financial companies given that they have this inherent need to deploy money quickly and that too in quality assets. Given the complexity of the demographies and the variations in income and professions, the challenge was even more acute for them and this gap or weakness has been exploited by several loan aggregation companies over the years.

Online businesses like BankBazaar, Paisabazaar, Policy Bazaar, etc have emerged and established themselves as loan aggregators, thereby passing on leads to financial companies like banks and NBFC's. However, the quality of the lead has to be still ascertained by the banks and NBFCs through their own efforts, due diligence and filtering to assess the suitability of these leads and the conversion from a lead to a prospect and finally to a borrower.

So, to that extent, lead generation businesses have helped in providing a database of potential borrowers but have not been able to drastically or significantly reduce the actual cost of loan origination, which means accepted or approved borrowers who comply with the norms laid by the bank and can, therefore, be provided loans.

The challenge is more visible in unsecured loans rather than the secured ones simply because the need for proper credit assessment and due diligence and ability to interpret a potential borrowers' ability and intention to repay is all the more vital.

Also, the need to meet deployment targets is another major reason that banks have challenges in finding adequate numbers of borrowers who meet all their criteria.

Peer-to-peer (P2P) lending platforms have been embraced as a solution to these issues by banks and other financial companies globally.

A P2P platform provides a curated list of pre-verified, credit assessed list of borrowers from whom the financial companies can cherry-pick based on their appetite and provide loans, thereby significantly reducing their loan origination cost and improving their operating spreads.

Increasingly, banks and other financial companies will see a lot of value accruing to their business by aligning themselves with P2P marketplaces who perform all the necessary verification, credit assessment and also use various social and other information to rate borrowers and build a lot of analytics for intelligent credit decisions over and above the conventional methods which will prove to be an irresistible proposition to conventional financial institutions.

We are entering a period of significant financial disruption both through technology and innovation and loan origination paradigms are going to change significantly in the coming days.The writer is founder of www.i-lend.in