By John Brown
Today, more and more people prefer lending to conservative bank loans. That is because financial technology and automation of the lending process make obtaining money more accessible, faster, and safer. Online loans from fintech companies are a unique opportunity to get money without leaving home and wasting time. Processing a borrower’s application and issuing funds in such lending organizations takes 7–15 minutes. You can visit Get Cash to get such services.
The term “fintech” refers to all technologies related to money management using high-tech equipment and software. Fintech is financial programs, sites, and organizations that provide services remotely via the Internet.
Today fintech is used for money transactions, including:
- Remote asset management
- Funds in e-wallets
Fintech individualizes your relationship with finances, allowing independent management without intermediaries. That saves you time and effort.
Banks and fintech companies have different attitudes to the lending process. Banks are very careful in the process of selecting customers. Its average borrower is a person aged 18–50 who has a permanent job with a sufficient salary, a good credit history, an apartment, car, or other property that can be used as collateral or guarantee repayment of loans.
Fintech lending is a lending activity that involves using technology and innovation to improve financial performance. Fintech credit is a loan issued through electronic platforms (the likes of PPDai in China), including directly from user to user (peer-to-peer, P2P). Such platforms provide direct contact between investors and borrowers.
Fintech companies are usually small, compact, and, at the same time, mobile organizations that lend money. All you need is a passport and TIN, be an adult, and stay in the country. It is also necessary to have a card to which the money will be sent.
The main benefits for users, in particular, investors and borrowers, include the following:
- Reduced interest rates for borrowers
- Opportunity to increase profits for investors
- Convenient customer service
Investing in fintech credit benefits investors because it differs from low-yield bank deposits and is more diverse than a company’s one-sided debt obligations (such as debt or retail bonds). Fintech lending companies offer reduced interest rates for borrowers and increased returns to investors.
The wide use of digital technologies decreases operating charges for credit intermediaries, eliminating the need for physical branch networks and providing complete automation of lending processes, credit risk assessment, and pricing processes.
Extensive use of information technology allows fintech platforms to provide a more convenient service for customers. Information on risks is provided, and investment and credit processes are carried out mainly via the Internet, reducing search costs and speeding up credit processes for borrowers and investors. It is also easier for investors to provide detailed data on credit transactions in the markets of electronic platforms.
Fintech lending can be considered an alternative source of financing for existing borrowers. The advantage is that fintech lending can increase the availability of financial services for underserved segments of the population. More efficient processes and specialization allow some fintech lending platforms to issue lower-cost loans that are not cost-effective for banks.
The affordability issue in traditional banking is prevalent in countries with economies in transition, where access to credit is a critical element of financial integration. UBS polls show that people’s propensity to borrow from the P2P platform is much higher in developing economies.
So, as we see, fintech lending has many advantages over lending provided by banks. That explains why fintech companies are developing extremely fast, taking away market share from traditional banks. Prospects for further development of fintech lending are excellent.
John is a financial analyst but also a man of different interests. He enjoys writing about money and giving financial tips, but he can also dive into relationships, sports, gaming, and other topics. Lives in New York with his wife and a cat.