Sep 29, 2020 ●15 min read
5 Ways Fintech Is Changing the Loan Process
Tired of waiting in a long queue, brokers, and pesky practices to get your loan application through the bank? Enter Fintech. Heard the first time about this term?
Fintech is a hybrid slang term that means technology, innovation, and its application that aims to compete and replace the conventional financial practices in the delivery of financial services.
Fintech corporations are empowering consumers to take control of their financial lives. They are creating more financial awareness more than ever, making them finance literate and independent.
It’s rending apart the monopoly regular banks had to assist customers get finance simply with the assistance of advanced digital financial technology.
What are fintech corporations doing differently from traditional banks? They're combining traditional financial services with the newest in digital financial technology and massive information to form your lives easier and better.
When you’re in need of a personal loan, what does one commonly do? Approach a conventional bank or a financial institution, right? However, the method is often quite frustrating.
The eligibility criteria are not simple to meet, and also the paperwork is simply too exhausting. While you were struggling to induce a personal loan, the fintech business emerged to alter the lending process forever and for good.
Fintech corporations are new, they're advanced, however, they undoubtedly aren’t as meticulous as the traditional lenders.
Here are a number of the most effective aspects of fintech companies in India:
Traditional banks and financial establishments accept deposits from customers and so extend their loans to provide to customers in need. However, do they earn cash through this model? They charge borrowers a lot of interest than they pay savers.
Fintech business has managed to overthrow the bank’s authority with its peer-to-peer lending. Fintech startups have created a platform wherever individuals will earn interest by lending their cash to those in need.
Fintech startups charge a small fee to determine the association between the lender and the borrower. rather than traditional applications, the borrower submits compelling stories as to why they need a loan.
Traditional banks still consider humans to hold out the underwriting process and risk assessment of the profile. Fintech corporations have got each of these processes automated. This helps to hurry up the personal application process.
Using financial technology to handle the underwriting process, lowers the operating costs, and increases transparency. That’s the reason why fintech corporations can give competitive interest rates to their borrowers.
Another feature that sets fintech companies except for traditional banks is the speed at which they work. they provide quicker applications, approvals, and disbursal.
It might take weeks to get loan approval from a conventional bank. Fintech companies will do it within a couple of seconds.
Fintech companies don't rely solely on factors akin to your credit history; they use a large variety of information points based on your online interactions to make sure that you simply have the financial capability to repay the loan.
Fintech business lenders use advanced technology to make sure that your personal and financial details are secure. They use tokens to look at your data from other sites and they don't have the option of saving or storing it. So, there's no doubt of them exploiting your data for the other purpose.
Other security procedures like cryptography and website security, are also used to safeguard your information.