Technology has touched every sphere of our lives. In fact, since the inception of technology, many changes have taken place over the last couple of years. Today, almost every kind of industry is dependent on technology and finance industry is no exception. It has completely changed the way of banking today’s time and not just private sector banks, but also nationalized and NBFCs. Gone are the days when customers used to wait for days to process a loan application. With instant loans in place, in just of matter of few hours, the amount is credited into bank accounts. With Fintech companies coming into existence, the process of lending and borrowing has changed entirely, making it quick and convenient for customers.
What is Finance Technology?
For people who are new the term Fintech, it is a short form financial technology. Financial technology is nothing but a set of programs and technology used to support banking applications. Almost every financial institution is dependent on this technology to provide latest and upgraded banking services to the customers. Every day, new innovations are made to make the lending process comfortable for customers. Every company using this technology are categorized as Fintech companies. Customers don’t even realize, but the whole process is running in the backend with the help of the internet and cloud services.
The new lending process
Undoubtedly, fintech companies have changed almost every aspect of the loan process. For centuries, the traditional loan process included banks asking securities from customers in lieu of lending money and earned in the form of high interest paid by the borrowers. Apart from this, in the traditional lending model, the whole lending process was lengthy and time taking but now it has been simplified to extremely low time taking process if you see Bajaj Finserv they offer you instant approval and disbursal of Bajaj Finserv personal loan within 24 hours after submitting required documents. However, fintech have subverted the traditional loan methods with instant lending.
Fintech has created a highly secured environment and a platform where lenders meet the borrowers to understand the need of an individual and in return charge a small brokerage fee from the lending companies for making the connection.
Availability of loans
Ever since the options of instant loans are available, customers are using it as an opportunity to bridge their financial gaps. Instant loans are approved and disbursed instantly, within a span of 24hrs. Thanks to the internet and cloud services, that has facilitated fintech companies to make the processing faster. Consumers can now easily apply for loans online, by filling an online application form.
Easy and faster approval process
Regardless of the amount and type of loan an individual apply for; finance technology has made the entire process faster and convenient compared to the old process. Banks typically used to take days to process a loan application, right from an application request to disbursal of loan. However, with fintech in place, it takes less than 24 hrs to approve and disburse the loan.
Quick disbursal is just one part. The lending and borrowing model works on whether or not the borrower a low risk or better, a non-risk customer. Financial technology allows the banks to utilize the data collected from various sources to determine the creditworthiness of a borrower by credit score and all other analysis. These data points help the banks to understand, how likely the borrower is going to repay. Such massive data was unavailable a decade ago. However, today with the help of the technology, such substantial data can be crunched in a few seconds, giving accurate information about the borrower. Not only this, the automation process is extended to risk assessment as well, which was not the story earlier. Even 5 year ago, it usually used to take days to the assessment due to manual proceedings. However, with the automation, the operational costs have gone lower, giving an opportunity to lenders offer loans at competitive rates.
Extended offering to more borrowers
Due to new lending models, banks and other financial institutions are able to extend their offering to more borrowers who did not stand a chance before. As a result, small business owners, students, homemakers have now access to instant loans from fintech companies for which they have struggled earlier. In other words, these borrowers have easy access to loans without depositing collateral to the bank.
The opportunity of choosing the tenure and amount
The online lending model allows consumers to choose the loan amount and tenure that would be comfortable for them to repay. Also, with no collaterals required, the entire process has become convenient and instant.
Less banking time
Fintech companies have made possible for customers to avoid going to banks, which was not the scenario earlier. Earlier, people had to take out time to visit the bank especially. However, even small information about your loan, bank accounts, and credit cards is available at a touch of a button.
Financial technology is a path-breaking development in the banking sector. Today consumers find it difficult to visit the doctors. But banking services have become super-easy. It is far more ahead from the traditional banking practices of documentation and physical verification.