From technological advancement to the implementation of financial technology in our monetary system, Fintech today is driving the rise in personal loans across the globe.
What Is FinTech?
According to Wikipedia, Financial technology (abbreviated fintech or FinTech) is the technology and innovation that aims to compete with traditional financial methods in the delivery of financial services. It is an emerging industry that uses technology to improve activities in finance. The use of smartphones for mobile banking, investing, borrowing services, and cryptocurrency are examples of technologies aiming to make financial services more accessible to the general public. Financial technology companies consist of both startups and established financial institutions and technology companies trying to replace or enhance the usage of financial services provided by existing financial companies.
Fintech simply means Financial Technology which is the integration of technology into offerings by financial service companies in order to improve their use and delivery to consumers.
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.
Financial technology has been used to automate investments, insurance, trading, banking services and risk management.
Under the terminologies from Fintech, you can see Fintech companies use a variety of technologies, including artificial intelligence (AI), big data, robotic process automation (RPA), and blockchain.
AI algorithms can provide insight on customer spending habits, allowing financial institutions to better understand their clients. Chatbots are another AI-driven tool that banks are starting to use to help with customer service.
Today, Fintech companies are improving with their possible best to empower consumers to manage their financial lives. They are making financial awareness more accessible than ever. Hence, making consumers financially literate.
Fintech And Personal Loans in 2021
In today’s 21st century we live, there is no need of carrying all your necessary documents to the bank — before checking for your qualification for loan. There is rapid advancement of technological tools, and our smartphones or computers are there to go through to confirm if you are qualified for a loan or grant.
Taking a look at the Americans, they are borrowing money now more than before, and thanks to Fintech application for offering a convenient solution for loans. Consumers now love Fintech and its application — since it helps to apply for loans at a faster and easier way.
Everyone hates to go to the bank and be asking some kind of questions that are very frustrating and sometimes disqualified during the paperwork sufferings.
Thanks to technology advancement as fintech industry has emerged to help change the way we apply for loan — by applying for a loan and getting it easier.
I would like to give you some of the ways fintech has improved the loan application 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
Fintech has been helping in the provision of fast approval and funding to persons applying for loans. Credit, Debit and Master card providers and banks sometimes take time to process and approve your loan. The duration can be weeks or months but fintech lenders most likely process and approve your personal loan in 24 hours or less. This calls for the need in choosing fintech companies when you are in-demand for cash urgently.
Fintech Companies Make Use of Data
The advantage of data has helped fintech companies to process your loan or grant applications faster. Fintech lenders make use of data from several alternative sources. Fintech companies relying on the use of data also help to know how likely you are to repay the loan at the given duration.
Fintech Can Provide Perks and Savings
Most fintech lenders need to save money on other costs such as rent, administrative expenses and personnel by taking advantage of automated processes. This could help provide consumers with perks and savings such as offering low interest rates and favourable loan terms.
In summary, Much of personal loan growth was driven by online loans originated by FinTechs. As of 2019, FinTech loans comprise 38% of all unsecured personal loan balances, the largest market share compared to banks, credit unions and more.