Tech vs Touch: Why a pure digital play is not a great road in lending?

For years, the banking industry has explored the allure of fully digital strategies.

- DEEPAK AGGARWAL

While branchless banking and app-based services have proven successful in the West, India's vast linguistic and cultural diversity poses challenges for a one-size-fits-all digital-only model. Here, particularly in the Non-Banking Financial Company (NBFC) sector, a blended "phygital" approach—combining physical and digital strategies—has emerged as a more sustainable and impactful solution. India's financial institutions have embraced digital transformation in various operations—payments, onboarding, and customer service among them. Yet, in lending, especially to underbanked and first-time borrowers, a hybrid approach has shown more promise.

Phygital lending allows NBFCs to scale operations while maintaining the human connection vital for trust, education, and responsible financial behaviour.