How Fintech is affecting Loan Apps
Technology is changing every single industry, and lending is no exception. In the past, lending used to be exclusive purview of banks and credit unions. Today , numerous fintech companies are now extending loan to consumers and small business owners and their practices are changing the loan process. The innovations of fintech companies have changed nearly every aspect of the lending process and that includes the basic model that makes lending possible. The traditional model of lending embraced by banks for centuries was to accept deposits from customers in order to extend loans to other customers and to earn money under this model, banks typically charged borrowers more than they paid to the savers.
Today, companies have subverted its process with peer-to-peer lending. Through fintech, lending companies have essentially created a venue whereby individuals can earn interests by lending to other individuals, and take a small fee for brokering the connect. Rather than submitting a traditional application, borrowers secure loans by presenting compelling stories of why they need the loans. The fintech is enabling faster approvals and funding of the loans. Regardless of the type of loan on offer, fintech companies tend to pride themselves on offering faster application, approval and funding times, especially compared to traditional lenders. Banks typically take weeks to approve loans and even credit card providers, which often approve applications quickly online, take weeks to print and distribute the cards.
Fintech companies are also automating the underwriting process. The automation process extends to risk assessment as well, and this helps to speed up the lending process different from banks that still rely on human to handle this part of the process. Ultimately, automation lowers the operating costs, thus fintech companies to offer loans with competitive rates to borrowers. Because their focus is technology, fintech companies on safety. They have tech measures in place to safeguard consumer details. In particular, they use tokens to briefly see data from third-party sites rather than taking or saving it. Fintech companies are changing the loan process in exciting ways. The changes affect every aspect of the process from how consumers engage with lenders, to how profits are generated, to how loan applications are assessed, to the underwriting process. From Trendpro Systems Ltd