Not very long ago, to get a loan people had to visit to many banks and lending institutions. The application process was very complex and time-consuming. It was very hard to secure a loan without any security or guarantor. After providing all the documents and security things, it was not guaranteed that one will get the loan happily.
But in recent times, FinTech companies have entirely changed the lending industry. The lending industry driven by the latest innovation in technology is witnessing a paradigm shift.
Technology is changing almost every aspect of lending including how you apply for a loan like loans for bad credit with no guarantor, to whom and where. Banks and credit unions are no longer the only financial institutions to provide loans. A large number of new players have entered the lending sector such as online lenders or direct lenders, private lenders, etc and challenged the status quo of traditional lenders.
To stay in the business, lending institutions are adopting digital marketing, artificial intelligence, machine learning, voice recognition, and cloud technologies.
The Move From Manual To Virtual
The availability of internet, smartphones, laptops, etc has enabled lenders to interact with potential borrowers via the web or mobile apps. This change has empowered both lenders and borrowers equally and is helping lenders to provide more loans in minimum time with less risk.
For lenders, the adoption of tech-enabled tools to check the creditworthiness of applicants has removed the need for manual assessment of the application and quick loan disbursement to eligible applicants.
With the help of social media and digital marketing strategy, lenders are expanding their outreach beyond target markets. Based on the search by borrowers, they are designing a new loan product every day. Hence, there are multiple choices available in front of borrowers.
Multiple Choices For Borrowers
Earlier when technology was not involved in lending activities, borrowers had very limited options to choose from. They had to borrow from a bank or credit union. Further, lenders had a fixed set of loan products and borrowers had no option but to settle for what was available for them.
Technology has given multiple choices for borrowers. Not only a borrower can decide where to apply for a loan but also he has various offers from different lenders such as easy loans to select from.
Technology has also made the application process very simple. You just need to send a single application online and you will get multiple choices within a short period of time.
Redundancy Reduced
Earlier borrowers had to submit a large volume of data including hundreds of pages. And it was very difficult for lenders to evaluate all the documents and sometimes they missed some critical points. With new tech-driven tools based on artificial intelligence, machine learning, big data, data analytics, have enabled lenders to quickly get all the data of prospective borrowers and analyze it to get detailed insights into it. With detailed insights, it became easier for them to evaluate the potential risks involved.
Apart from assessing the borrower’s credit history, they can also track the social media activity of a borrower to get the information regarding their spending habits.
Faster Loan Disbursement
From applying for a loan to getting approval and money into your bank account, everything has become fast. Thanks to technology such as machine learning algorithms, the end to end process have become very fast. What used to take months earlier now can be achieved in a few days or a week. If the loan amount is small then it can be disbursed within a few hours as well. Supported by cloud-based technology, these applications work 24*7 in the background with the help of automation. The experience for both lenders and borrowers has improved a lot. And borrowers are able to get hassle-free loans.
Conclusion
The UK’s lending industry is going through a rapid change lately as more and more lenders are embracing new technologies such as Artificial Intelligence, Machine Learning, Big Data, Cloud computing, etc to provide better customer experience. Technology has diminished the gap between old and new lenders, making it easier to lend and borrow. Also, it has helped in evaluating the risk more accurately.
Summary: Technology has brought a massive change in the financial industry and the lending sector to is not untouched of it. It has bridged the gap between lenders and borrowers like never before.