The other day, over a pint at The Bier Library in Bengaluru’s Koramangala—because not every “coffee chat” means Starbucks—a soonicorn founder said something that stuck.

“I took a personal loan using the Cred app,” he told me, “because the bank wanted me to apply first with a long list of details and then do a video KYC. I wasn’t comfortable with all of that.”

He wasn’t complaining about interest rates or repayment terms. He was complaining about friction. “It’s the whole process. The conversations with the bank. The endless requests for documents. It’s all just… too much,” he sighed.

Traditionally, one would assume digital-lending apps and non-banks (NBFCs) are for people with patchy credit scores. Not the upper crust of startup founders or mid-level IT professionals with solid Cibil scores and high incomes. Apparently, that assumption is outdated.

After that conversation, I checked around. Half a dozen founders admitted they, too, would rather borrow from apps like Cred or Navi than from a traditional bank. And they’re not outliers. The salaried middle class, the ones banks have spent decades wooing with glossy personal-loan ads, are increasingly choosing digital non-banks instead.

The math isn’t even that different. “Banks offer ‘instant credit’ at 10–16%; sometimes even more. Cred, Navi, KreditBee… they start at around 10–12% and sometimes go up to 25%. At times, the deal is better than what banks offer,” another borrower told me. “Sure, the rates can vary, but it’s the quick approval that matters.”

Digital non-banks approve loans within 24–48 hours. Banks, despite all the “digital transformation” talk, still take 3–7 business days. And unlike many banks, apps like Moneytap or Cred keep a pre-approved credit line ready.

“These platforms offer better services as well,” claimed the founder of a D2C company. “You could close the loan whenever you want. If it’s by a bank, it’s not easy. Their app or website does not offer that facility. You may have to visit their offices.” And time, for these individuals, is costlier than the interest difference.

To be clear, this is not about those “Chinese” lending apps the Enforcement Directorate keeps probing. These are digital NBFCs registered with the central bank.

And they have been busy. The Reserve Bank of India’s Financial Stability Report for the first half of FY2025 states NBFCs and fintechs now account for 84% of personal loans under Rs 50,000.