The world has become smaller and closer to the advent of technology. Therefore, technology has dominated in all areas making our lives easier and simpler. In today’s time, wherever you go, you will find people being busy using mobiles and laptops. Everything is available online right from wardrobe shopping to grocery shopping and many more. Including like even loans services too at the tip of your finger!
If you are planning for housing or car loan and are worried about the eligibility criteria for loan approvals from banks. Then don’t worry technology has come up with an answer – fintech start-ups. Fintech or rather wherein technology has been implemented in the finance sector too. These start-up companies provide a platform to customers for lending, borrowing money, fund-raising, and most importantly, for mobile payments.
How do fintech companies function in loan services?
Financial services or applications with a combination of the latest technology has made many developments. It has provided better services to you. This has helped businesses and start-up across. You can check Libertylending.com for loan-related services for consumers. The simple processes of borrowing money from such companies have made it very convenient for people around the globe. These companies are posing a threat to traditional banks. They are causing a little bit of disruption in the regular bank services. The companies connect you as a borrower to the lender and also as an entrepreneur. It will connect you to the investors.
In the traditional method, banks used to collect deposits from customers and give the same amount to borrowers. Apart from that, banks earn interest from the borrowers. However, with the advent of fintech, there has been a change in the age-old process. The company will connect you to the lenders. While the lenders directly will take some amount of interest from individuals. In the process, the fintec company will charge some amount of fee brokering the connection. These companies offer a wide variety of loans such as student loan, mortgages, invoice financing, business lines of, and many more. Fintech has more innovative technology and is trying to acquire its place in the market in the near future.
Vs. traditional banks loan services
Banks are also trying to streamline the process by adopting technology to keep pace with fintech companies. In the near future, tech companies will gradually take over the market globally as people are getting and prefer to stay connected through digital media only.
- First and foremost, in the traditional method, you will be checked for loan eligibility criteria. They will look at your credit score, here as Fintech doesn’t look at all such things as they value you more than the credit.
- The word Fintech itself sounds almost every process is being in digital format, whereas banks are still lagging. Not all documentation can be digitalized yet.
- Millennials are changing their views of traditional banking method. They find it more convenient to borrow from fin-tech companies rather than visiting banks. A millennial will probably trust fintech companies as they are not so happy with the products and services which traditional bank offers.
- Traditional banking method is not accessible to the third world country like East Africa. Fintech has been of excellent services for them. The process can be done in a digital medium even from remote areas.
- Traditional bank services charge more interest rate; unlike these companies, they only deduct an amount as a fee for making connections between various individuals and professionals.
- The traditional bank takes time to sanction loan to the customers such as a week or even a couple of month whereas, fintech companies can offer you a loan within a day or maybe within 2 hours or even few minutes the moment you fill the loan application online. The processing in sanctioning loan through fintech companies is quicker and faster. They connect through data, and the more data you provide, the cheaper it will be for you.
- Banks require a mortgage generally the most valuest asset which you posses say could be real estate. Such a policy is not there in fintech companies.
- It is a mobile generation era. You will find most people are always engrossed in the mobile device either buying online, or reading news Fintech is born in a mobile app era, whereas banks are improving mobile-banking as well.
- Fintech companies have made services to the customers very convenient and satisfactory with its speed and connectivity to the world. Whereas, traditional banks are still trying to cope with it.
- Large organization matters to customers as banks may not be able to provide minute services to existing as well as old customers, whereas fintech are usually start-up with few employees in the organization. This allows them to take care of their customer’s minute things
Millennial find this platform very appealing as they grew up with mobile devices getting each and everything at the tip of their finger. Remember, fintech companies look and provide services like a bank, but they are not. You can use it for money storage in a digital account you can even have a digitized debit card. Fintech companies do have a partnership with some established bank to provide better services and products to customers. Fintech companies will revolutionize the lending process in the industry.
Gone are the days wherein you have to save money only in the bank or some safe place at home. You can now save in several fintech companies. The company has come up with some reward to lure customers for saving. So, it will automate your savings.