The financial industry has been seeing a lot of tech disruption in the past few years. Innovations like cryptocurrencies and digital payments are making financial transactions easier. Lending is no exception. In the past, borrowing money was a long and laborious process. Thanks to digital change, people can expect it to happen much faster. That is just the beginning, as other trends are making lending a lot less painless. Here are some things you can expect in the future.
Increased Use Of Digital Marketing
One thing that you’ll notice when you’re searching for loans online is the increased presence of online marketing for loans. Whether it is home loans or car loans, all you need to do is type in a search, and they’ll be presented with a variety of loan sites. While some of these sites have dubious credentials, there are several legitimate sites out there. Once you visit a website, you will find that many of them provide all the information you need and make an informed decision about a loan. This is to push potential borrowers to take that final step with them.
More Lenders In The Market
Besides the increased visibility of lenders online, you might notice that it isn’t just banks that are starting to lend out money. Many of the online lenders you see are not banks at all and are dedicated, online lenders. While they offer higher interest rates, they make up for it by being less strict than banks. For example, most banks require you to have a high salary before they lend to you. But some of these lenders have a much lower acceptable salary. This means that many people will have another option for borrowing money.
Faster Loan Approvals
Another major advantage that you’ll see spread out equally is faster loan approval. In the traditional lending process, a borrower sent in their application, and then they waited. Some loans took years to evaluate. This was mostly because of the various data points that the lender had to check. For example, they had to confirm your salary and more. Nowadays, a lot of this data is easily accessible. Some lenders can offer same-day approval of the loan. At its slowest, it might even take 24 hours. This is incredibly useful, especially for those who need the money.
Using A Wider Set Of Factors For Credit Scoring
Besides the faster approval, modern technology now allows for more factors to be used when judging whether someone deserves a loan. Called full-spectrum credit scoring, it uses data analytics and AI to get a better idea of whether someone can pay off a loan. The computers look at their spending habits, bill payments, and more to calculate the likelihood of you being able to pay the loan. This is a better way to check than simply using a few factors like their salary and their accumulated credit score.
The Use Of Blockchain Technology
Blockchain is one of the more popular words being thrown around in the fintech world right now. The technology behind cryptocurrencies, it can allow for better loan transactions in several ways. For one, you can soon expect loans to come in the form of cryptocurrencies. While they are volatile, they are also easy for cross-border transactions, so you can expect a loan is coming from outside of the country. Additionally, the blockchain can allow for real-time transaction data and connect borrowers to even more lenders.
Robot Monitoring Of Loans
AI is also an essential part of the future of loans. This is mostly in the loan-monitoring sector. One of the effective ways a bank would be able to prevent defaults is the banker taking notice of various loans and keeping in touch with the borrower. With hundreds of loans out there, humans wouldn’t be able to handle it. This is where the AI comes in. They notice trends in the market, and they can easily arrange for a human agent to get in touch with the borrower to see if there is any way the lender can help them pay off their loan.
Multiple Payment Options
Another great change that you can expect is various loan payment options. Instead of limiting it to a bank deposit, lenders are giving as many ways to pay as possible. They can still make their deposit in the bank, but they can also use debit cards or even electronic transfers.
Many people hesitate to borrow money for a variety of reasons. With the changes in the lending industry, many of these objections are not there anymore. You still have to be careful to borrow within your means, but the digital revolution makes it easier and simpler to take out the loan you need.