Digital lending offers a host of opportunities, reshaping the traditional lending landscape and paving the way for innovative financial solutions. Let’s explore some of these key opportunities.Firstly, digital lending encourages the development of new lending models, such as peer-to-peer (P2P) lending. Countries with advanced digital lending ecosystems have evolved to offer a variety of innovative products.By diversifying the sources of funds, creditors can experiment with different use cases, each tailored to their unique risk appetites. This flexibility allows lenders to retain risk on their own terms, fostering innovation in lending practices.Additionally, digital lending provides a more attractive business case for fintechs. In Ethiopia, fintechs are currently limited to working with 30 commercial banks and around 40 microfinance institutions (MFIs), many of which develop their own lending products.However, liquidity constraints in the financial sector pose significant challenges to fintech growth. Moreover, fintechs often face the uphill battle of convincing hesitant potential partners to take on the risks associated with digital lending.By bypassing some of these hurdles, fintechs could bring products to market faster, allowing them to better serve the needs of their customers.Digital lending also offers alternative lending options for individuals and businesses. Many micro, small, and medium-sized enterprises (MSMEs), as well as individuals, face financing gaps due to their inability to provide collateral.Currently, reports from the National Bank of Ethiopia reveal that only 300,000 individuals have successfully secured loans from banks. Expanding digital credit offerings could unlock access to financing for millions of people in a relatively short amount of time.