Development and use of technology has improved several areas of life and all processes including banking and finance. You will see the use of different new, innovative and useful technologies is the banking sector that has improved the loaning process.
All it takes is just one bank to be innovative in their loaning process and think out of the box to use new technologies in their applications and set a new standard. It is for sure that others will soon follow suit simply to stay competitive.
All banks and several other non-bank organizations and even private money lenders are now taking help and relying heavily on technology to provide their customers with better professional loaning experience. You may be aware of this fact and have also experienced the use of technology if you are a person knowledgeable about the stock market. You will be un-phased by such changes.
Reasons the concept took off
The concept of using technology in lending process by banks and several other financial institutions actually took off during the Great Recession in 2008. There are several good reasons for this.
- This is the time when peer to peer or P2P lending sidestepped the regulations set for all traditional money lenders to strictly adhere.
- This is the time when a lot of Americans started looking for loans from alternate sources when the traditional money lenders failed to approve loans any longer.
- This is also the time when the world witnessed that several founders of money lending institutions rolled their shutters down and those that remained open made drastic and dramatic changes in their staffing.
- It is also when Americans were petrified and annoyed with the loan irregularities as well as the lack of disclosure on any personal investment.
It is believed that when any business does not follow or face any outside regulation it is a lot easy for unsavory and in most of the cases illegal activities to occur.
However, despite of all these surprising factors and worrying situations, peer to peer services still was found to be as popular as ever before. This is because this is the most accessible and easy source to borrow money during the time of emergencies, medical, personal and otherwise.
It is for this reason that almost all of the traditional lenders eventually felt the pressure to stay competitive and thrive in the market. It is during this time they feel that it is necessary to make switch and use newer and better technology and fintech tools to make changes in their own loaning processes and provide their customers a better experience.
The ways tech can improve
Typically, there are ways more than one in which use of technology can improve the loaning process. Such improvements will not only help the lenders but also the borrowers as well. Over the years and with the use of new technology in loaning, there is a substantial growth and progress noticed throughout the finance industry.
Consider the case of Wells Fargo when they recently though of switching over to the online lending marketplace. Visit sites such as Liberty Lending and you will know about the online loaning process wherein you can get quick approval and fast loans such as the unique FastFlex loan of Wells Fargo. The features of such loans make these lending sources more popular. Typically the features include:
- You can borrow an amount anywhere from $10,000 to $35,000.
- You can get this amount transferred safely to your bank account as early as the following business day if not earlier.
- You have a much flexible and affordable repayment schedule and even opt for a weekly payment.
The rate of interest of these loans usually ranges from 13 to 22 percent and maybe even a tad more depending on the lending policy of the lender as well as the type and amount of the loan as well as the creditworthiness of the borrower.
These loan programs are designed for borrowers who need fast cash for a short term funding for personal as well as business purpose. The use of technology has provided the people who often flock to the online lenders with the assurance of safety and security with their personal and financial information.
Rise of tech use
Following the footsteps of Wells Fargo, the first key bank to construct an online money lending platform in-house, one by one in the finance and mortgage industry followed their suit and even went a step further to take a few other useful and mutually beneficial initiatives.
It is seen that several institutions formed new partnerships with other organizations having enough lending expertise. All major banks can now offer loans in different forms and terms called commonly as small dollar loans to individuals as well as small businesses as quickly as within the same day.
Such distribution partnerships has helped the traditional lenders in a great way to work in tandem to improve their service, quicken their loan process and make it convenient for every borrower as well as all the other people involved in the process.
With such help and facilitation in the lending process, there is no doubt that there will be more and more use of tech in the finance industry in the future.
The benefits enjoyed
Apart from the fact that use of new technology has helped the finance and mortgage industry to advance rapidly and improve their loaning process, it has eliminated the chances of the costs and frustrations to pass on to the customers.
- Typically in a mortgage industry, it takes a lot of time when you want to clause a home loan. It is a complicated as well as a costly process.
- Apart from that, the money lenders also face the risks and feel squeezed for profit margins primarily because they have to bear the burden of the heavy and ever increasing regulations.
All these previously affected the borrowers negatively as they felt that the excitement of owning a home being crushed under this heavy burden and costs.
All these can be aggressively tackled by technology and transform the entire lending and borrowing experience.