It is undeniable that the world of loans has changed dramatically over the years. Although this is primarily due to the widespread nature of the internet and the popularity of effective online lending solutions, there are a number of financial technologies that continue to impact the way we borrow today.
Technological innovations have made borrowing a much faster and more reliable process, and here are some of the ways these advancements have transformed the lending process as we know it:
Blockchain is one of the most impressive technologies currently impacting the world of finance. Although it is most commonly associated with cryptocurrencies and digital assets, it could potentially have a transformative effect on finance. The speed, increased security and auditability of blockchain could change everything from money transfers and online banking to smart contracts and other verifiable loan data. However, the novelty and disruptive nature of this technology has made people quite cautious. If the environment becomes more blockchain-friendly, it has the potential to transform banking and lending processes into something much more logistical, secure, and user-friendly.
AI and machine learning
Banks, lenders, and credit card companies have been using artificial intelligence (AI) and machine learning for some time now. Not only can these technologies improve and streamline the loan process, but they could also be used as a security measure, ensuring that no fraudulent activity occurs during these procedures. In fact, this form of security has become a primary focus for many fintech startups, providing a more secure and fraud-free solution for processing and managing funds, and thereby protecting customer money, sensitive data, etc
Digital signatures are certainly not new technology, but the financial industry has been surprisingly slow to adopt it. Online signatures can greatly simplify the process of identifying and verifying applicants, with features such as electronic documents even serving as ID for passports. Lenders could use this technology to identify the device used, IP address and other relevant factors, in an effort to determine whether digital signatures are legitimate. For this reason, it is quite shocking to see how slowly the financial industry is adopting digital signatures, but this is also expected to change in the near future.
Quick online loan
Online lending solutions have been on the rise since the popularity of the Internet has reached the mainstream. But aside from increased security and a more consumer-controlled environment, what’s most impressive about online lending is its incredible speed. For example, consumers can now receive prime personal loans in minutes. Whether they’re looking to fund medical bills or car repairs, they typically wait around 60 minutes for a loan decision and 60 seconds for a loan repayment. What used to take days for approval is now available in just hours, which could explain the sudden prevalence of online loans.
Convenient online banking
Banking has always been a brick and mortar process, requiring consumers to physically visit their local branches whenever they need to withdraw funds or organize their finances in various ways. For those without easy access to banks, this meant reduced access to funds, which made the loan and repayment process more difficult. But as online banking continues to evolve, these physical branches may even become redundant. From creating accounts and cashing checks to transferring funds and applying for loans, consumers can now use any device, anytime, anywhere for all their banking needs.
One of the biggest consumer concerns is how financial institutions access, manage and store their data, and for good reason. Banks have been accessing our financial histories for decades, but lending is looking to become a more private and consumer-controlled process with new innovations around data management. On the other hand, the popularity of data-driven innovations has also allowed lenders to access necessary data with the permission of consumers, thereby providing better loan deals and rates based on their consumers’ financial history.
While every financial institution has some system in place to manage and detect fraudulent activity, the potential for this process to evolve in the future is huge. AI systems are already used to detect fraud in seconds, but what if this process could be reduced to nanoseconds? As online transactions can be completed in seconds, faster solutions are needed to improve the safety and security of bank accounts, something we have yet to see in the fintech world.
Fintech has clearly transformed lending for good. Offering faster-than-ever speeds and security, consumers now have a number of financial solutions at their fingertips, helping to speed up and streamline the entire loan process.