Is anyone surprised to find out that technology has been booming in the last ten years? Each one of you knows that the rapid advancements in tech have powered the most outstanding developments in all industries. For today, let’s focus on the financial sector that registered a revolution since the adoption of the tech.
And even with all the advances the industry made, it didn’t even reach half of the advancement it could. In fact, the financial sector is just at the tip of pinnacle because with the progress of blockchain currencies protruding on the global markets and advanced securities evolving daily, who knows how the financial industry changes in the next decade. Everyone should get used to a sector that is continually evolving because technology is the source of development.
The need for alternative financing solutions came when traditional institutions (banks) were no longer able to provide people with the money they needed to solve their financial issues. Banks have tight lending allowances, and few people meet their requirements, so they must turn to alternative sources. Even if the world is heading towards a financial crisis due to the COVID-19 pandemic, banks aren’t willing to lend more money, regardless of the reason people are applying for a loan. For this reason, technology had to come with a quick fix.
And here is where online lenders enter the market. They present themselves as remote options for loan applications that offer people access to funds without asking them to sign up to a lengthy application process. While many entities still pay attention to financial states and credit scores, they provide people with money at more affordable rates than banks.
Ways that tech improved the lending industry
When people need a personal loan, they usually approach a traditional bank, but the process is more than frustrating. They find it challenging to meet the eligibility criteria, and the paperwork is tiresome. To stop their struggle, the fintech industry emerged and created alternatives to the traditional exhausting lending process.
Fintech companies brought unprecedented changes in the financial world.
Have you ever wondered how traditional financial institutions function? The principle is simple, they accept deposits from people, and use the resources to create a loan offering for clients in need. How do they earn a profit from this? They charge borrowers higher fees than the interest they pay to money savers.
The fintech industry can offer better rates because it managed to overthrow the traditional financial institutions’ authority through a strategy called peer-to-peer lending. This means it created platforms where savers earn interest by lending their funds directly to people in need. The fee the fintech companies ask when they connect lenders and borrowers is lower than those of banks. The borrower no longer submits an application; they share their story to let the lender know why they need the funds.
Faster and easier funding and approval
Another feature that sets alternative lenders apart from traditional entities is the speed at which they work. Because they function online, they offer faster applications, approvals, and funding. With a conventional bank, it takes even weeks to get approval, but online lenders have the needed technology to complete the process in hours. Organisations that offer online loans Canada application through the use of IoT to share with their clients the responsibilities they have once they receive the funds. The online lender informs the clients the interest they need to pay, the amount they’re billed monthly, and all the details they need to know about taking a loan.
With a bank, it would take weeks and sometimes even months to review an application and make a decision, but with online forms, people no longer have to travel the bank to provide extra documentation. With the implementation of artificial intelligence into loan decision banking, online lenders streamline the risk assessment that plays a vital part in the process.
Fintech companies rely on advanced technology to protect personal and financial details. They use tokens to view their clients’ data from other websites, without saving or storing it. Technology helps them review applications, but they cannot use it to store the data or manipulate it for other purposes.
They also use security procedures like website security and encryption, to protect information.
Online lenders have brought unique products like personal loans, business loans, student loans, marriage loans, two-wheeler loans, consumer durable loans, debt consolidation loans, and vehicle loans to the financial services industry. Due to their varied range, the financial sector has experienced a healthy product expansion in the lending area.
Now people can find a loan to fit their unique needs, no matter if they need money to fund an exotic vacation, change their car or buy business equipment.
Only the thought of heading to the bank sends chills down to your spine because their processes are slower than a sloth. The overly formal attire and language, the long queues, the conditions. It’s nerve-wracking even for a patient individual. Not to mention that it takes forever to get an answer from them being it approval or decline, which is why people prefer online alternatives.
The technological advancement in the lending industry is highly appreciated because it eases the process of applying for a loan. People no longer have to leave their houses (especially during these challenging times of social distancing). The process is no longer a hassle, but rather a time investment because they get the things done in half of the time, they usually spend visiting a bank office. And thank the SAAS advancements, clients can apply for a loan remotely. As long as their devices are connected to the Internet, they can pick any lender and request funds.
With urgent bills, people don’t have months, not even weeks to wait for the bank to approve their loan. However, tech has made loan approval easier because it provided financial entities with fast infrastructure; they needed to serve their clients.