Technology has revolutionized many sectors in the economy. More and more products and services are becoming available online and among them – borrowing money. The financial sector is no stranger to the advancements in technology and it is because of it we have new ways of paying for services and making transactions. eWallets and cryptocurrencies are slowly becoming popular as they bring transactions to a whole new level. These changes were brought through the rise of financial technology or fintech.
Thanks to this technology people can conduct transactions more efficiently through a friendlier user interface, easing up the process for the parties involved. Fintech gave birth to online lending which is an improvement of the traditional way of borrowing money in many ways.
Online Lending is More Efficient
Although online lending is still in development, it has already proven its efficiency. The platforms that provide this kind of lending are available 24/7 which is perfect for small businesses, individual entrepreneurs and individuals in general. But what makes them so efficient? Their ability to go over lots of data in a nick of time.
If a person decides to apply for a loan online, that person can find out in a matter of minutes if he’s eligible for a loan or not. This is because online lending platforms are data-driven. They can get creditworthy borrowers because they have access to more data such as shipping data, accounting records, social media reviews, online sales totals and more. Also, these platforms have fairer conditions for a loan and aren’t limited to a credit score alone.
Online Lending Is Cost-Efficient
Thanks to fintech, lots of business owners and individuals can now cut their costs and save a lot of time they would usually spend in a bank. The traditional borrowing model is costly which is why more people are opting for borrowing money online. Various banks and private loaning agencies have various fees that might be too high for some clients and they all need some time to go over documents.
Since online lenders have access to more recent data they can make a better estimation of whether someone is eligible for a loan or not. When it comes to running a business every business owner wants to cut costs as much as possible so anyone can see why more and more people are choosing online lending.
Fintech Makes Online Lending Platforms More Objective
Naturally, all lenders have their specific conditions and clients must fulfill them so they can get a loan. When it comes to land-based lenders the majority of loans are granted based on a client’s credit score. If this score is good then the client gets the loan and if it isn’t then they don’t. Banks and private lenders need to go over certain documents to verify a client’s eligibility and if these documents weren’t updated then they could bring them to a wrong conclusion. Since online lenders rely on more recent data they can make a more objective decision as to whether a client is eligible for a loan or not.