Fintech is a combination of the words finance and technology. Throughout the years, fintech innovations have helped make financial services better and faster than what was traditionally available.
Fintech encompasses various companies using software to provide financial services to their clients. These companies are most likely characterized as startups designed to disrupt or interfere with existing financial models and larger financial institutions that are less incorporated with technological advances. However, larger financial institutions now recognize the potential of using software solutions and are turning to fintech to improve and increase their financial service offerings.
Global investments in fintech have boomed in recent years. Currently, fintech is a multi-billion dollar industry. However, up until now, it is still dominated by startup companies that offer technological solutions to financial products and services.
Fintech is an umbrella term that describes several different services, companies, and products. If you have deposited a check using your mobile device or transferred some funds through an app, you have used fintech. However, its uses can often be more substantive and complex than that. You can now take out a personal loan or even settle an insurance claim by just using your mobile device.
Fintech companies are doing their best to empower consumers to manage their financial lives. They are making financial awareness more accessible than ever. Hence, making consumers financially literate.
The fintech industry is destroying the monopoly regular banks had. It had to be done in order to help consumers get financing quickly and easily with the aid of advanced technology. Fintech companies combine traditional financial services, which consumers trust because it’s what they know and are used to, with the latest in digital financial technology to make consumers’ lives better.
Fintech and Personal Loans
Gone are the days when you had to bring all of the necessary documents into a bank just to check if you are qualified to get a loan. You can now go through the entire application process using your smartphone or your laptop. Online lenders, such as Creditninja.com, can provide you with multiple loan offers after entering a few necessary personal details.
Americans are borrowing money now more than ever, and fintech offers a convenient solution for loans. Since fintech offers fast and easy loan transactions, more and more consumers tend to choose this platform.
When you take out a personal loan, you normally go to a bank or a financial institution and go through a long and often frustrating process. Most of the time, the qualifications are challenging to meet, plus the paperwork is a hassle.
While the traditional way to get a personal loan is exhausting, the fintech industry has emerged to help change the loan process for the better. The following are some ways fintech has improved the lending process:
Fintech Introduced Alternative Lending Models
When it comes to the traditional lending model, lenders tend to accept deposits from their clients to extend loan offers to other clients. One way the fintech industry disrupted this process is by making peer-to-peer lending known. With this, individuals can earn some interest by lending to others. Furthermore, banks that team up with peer-to-peer lenders enhance their online lending strategies and provide new products and services at a lower cost to their clients.
Fintech Can Provide Fast Approvals and Funding
Most of the time, credit card providers and banks take time to process and approve your loan. It usually takes a few weeks or even months. On the other hand, fintech lenders most likely process and approve your personal loan in 24 hours or less. It means, choosing fintech companies is great if you are in dire need of money.
Fintech Companies Make Use of Data
The reason why fintech companies tend to process your loan application fast is that they take advantage of data. Fintech lenders make use of data from several alternative sources. It is to determine how likely you are to repay the loan at the set loan terms.
The said data is collected and evaluated in seconds to get a glimpse of the borrower’s risk and creditworthiness. The information might include rent, utility, auto payments, and the like.
Fintech Can Provide Perks and Savings
By taking advantage of automated processes, most fintech lenders can save money on other costs, like rent, personnel, and administrative expenses. Because of this, they can provide consumers with perks and savings such as lower interest rates and favorable loan terms.
To Wrap It Up
The fintech industry made a lot of changes in the lending process, especially when it comes to taking out personal loans. It also made consumers’ lives better by providing easy and fast transactions. That is why more and more personal loan borrowers are running to fintech companies to get their job done.