How gold-tech startups are making gold loans accessible and hassle-free

August 25, 2021 5:37 PM

With social distancing and safety protocols in place, securing gold could have been challenging if gold-tech startups did not step up.

Gold Rate Today, Gold Price Today in India, gold, physical gold, Sovereign Gold Bond, SGB, gold investment, risks of holding gold, bank locker, locker rent, insurance, interest on SGB, capital gain taxThe use of technology has led to faster loan processing, accurate gold valuation, safekeeping, and cost-cutting.

With the emergence of new-age fintech platforms offering instant and easy loan disbursal, securing a loan has never been easier. From offering e-KYC at the customer’s doorstep to instant loan disbursal, borrowers can avail loans against their gold from the comfort of their homes. Typically, the same process would require the borrower to visit moneylenders, while carrying the collateral to be submitted with them. However, not anymore.

In the past year, lenders have witnessed a significant surge in the demand for loans against gold as borrowers faced an immediate and temporary cash crunch. In most scenarios of an immediate financial crunch, the foremost step one takes is either liquidating or taking a loan against their valuable assets to keep the cash flow in motion.

In the wake of the global pandemic, not only individuals but several businesses have also been impacted. With social distancing and safety protocols in place, securing gold could have been challenging if gold-tech startups did not step up. Let’s dive into some insights to understand digitally secured gold loans:

Digitalizing Transactions

One of the most prominent advantages of availing gold loans online is the unparalleled convenience that comes with it. People who earlier had to commute to jewellers or bank branches while carrying their valuable ornaments with them can now use their smartphones and request for a customer relationship executive to visit their premises and explain the various gold loan schemes.

With the branchless digital models of new-age fintech players, customers can apply for loans online or through apps. A loan manager visits the homes of borrowers, conducts due diligence on the borrower and their ornaments, and transfers the loan amount to the borrower’s account, all within a span of 30 minutes to an hour.

Security checks

The relationship manager visiting the borrower needs to ensure that the entire transaction is completed via digitally secured and reliable means. The identity verification of the manager, E-KYC, E-signing of the loan agreement and the digital disbursement of loan takes place through the means of a verified and secured network. Customer’s data is usually stored in a secure database to ensure data security.

Additionally, the most critical part of the transaction is ensuring the safety of the customer’s assets. Gold ornaments are packed in sealed packets that cannot be tampered with by the loan manager. The packets are also serial numbered and recorded in the transaction. They can only be opened by the banking partners for second audits and when customers release the gold.

Therefore, gold-tech players ensure that these assets are securely managed through technologically driven checks and assessments to safeguard customers’ trust.

Easy Payments and Top Ups

Further to the loan disbursement process, customers also have the option of making online transactions while re-paying the loan or while paying interest rates. Reliable, digitally-enabled processes are driving the popularity of these tech-enabled gold loan service providers.

Additionally, taking a top-up on any loan usually requires a couple of documentation processes where borrowers need to visit the bank to close the deal. Gold-tech startups simplify the process through technologically driven means, where the borrower does not have to go anywhere, and the entire process can be completed from home.

Low-Interest Rates and a Customer-First Approach

Most fintech players in the gold loan industry offer low-interest rates owing to the less operational costs involved in managing branchless digital models. Additionally, gold-tech lenders in the industry offer flexible, customizable pre-payment and repayment schemes. This enables the borrower to be at an advantage with new-age fintech players and NBFCs in comparison to traditional lenders.

More importantly, these lenders enable financial inclusion for small ticket borrowers who are often made to stand in long queues and go from desk to desk by making loans accessible and hassle-free. The process to avail of the loan digitally is fast, easy and convenient for the customer.

Driving the way forward

The use of technology has led to faster loan processing, accurate gold valuation, safekeeping, and cost-cutting. A robust customer service support is also a way in which these businesses ensure smooth gold loan delivery.

Customers who face any issues can contact the customer care department who will resolve their issue within the stipulated time. Fintech startups are, therefore, playing a pivotal role in paving the way forward to make the industry more inclusive and convenient for the customer.

by, Ankur Gupta, Founder and CEO, Ruptok Fintech

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