There’s no denying that the world of lending has drastically changed over the years. While this is mostly down to the widespread nature of the internet and the popularity of efficient 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 significantly quicker and more trustworthy process, and here are just some of the ways these advancements have transformed the lending process as we know it:
Blockchain technology
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. Blockchain’s speed, increased security, and verifiability could change everything from money transfers and online banking to smart contracts and other auditable lending data. However, the novelty and the disruptive nature of this technology has made people quite cautious. If the environment does become more accepting of blockchain, it has the potential of turning the banking and lending processes into something significantly more logistical, secure, and consumer-friendly.
AI and machine learning
Banks, lenders, and credit card companies have been using artificial intelligence (AI) and machine learning for quite some time now. Not only can these technologies improve and streamline the process of lending, but they could also be used as a security measure, making sure that no fraudulent activity is occurring during these procedures. Actually, this form of security has become a main focus for many financial technology startups, offering a safer, fraud-free solution for handling and managing funds, and thus protecting customers’ money, sensitive data, etc.
Digital signatures
Digital signatures are certainly not a new technology, but the financial sector has been surprisingly slow in adopting it. Online signatures can make the process of identifying and verifying applicants significantly simpler, with features such as e-Documents even serving as a form of ID for passports. Lenders could utilize this technology for identifying the device being used, the IP address, and other relevant factors, in an effort to determine whether digital signatures are legitimate. For that reason, it is quite shocking to see how slowly the financial industry is adopting digital signatures, but that will hopefully change in the near future as well.
Quick online lending
Online lending solutions have been on the rise ever since the popularity of the internet reached the mainstream. But apart from the increased security and a more consumer-controlled environment, what’s most impressive about online lending is its incredible speed. For instance, consumers can now receive prime personal loans in a matter of minutes. Whether they are looking to finance their medical bills or car repairs, they typically wait around 60 minutes for a loan decision, and 60 seconds for a loan payout. What would previously require days for approval is now available in just a couple of hours, which might explain the sudden prevalence of online lending.
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 different ways. For those who didn’t have easy access to banks, this meant a reduced access to funds, in turn making the processes of lending and paying back more difficult. But as online banking continues to evolve, these physical branches might even become redundant. From setting up accounts and cashing out checks to transferring funds and applying for loans, consumers can now use any device, anytime, and anywhere for all of their banking needs.
Data management
Among the main concerns for consumers is how financial institutions access, manage, and store their data, and for a good reason. Banks have been accessing our financial histories for decades, but lending is looking to become a more consumer-controlled and private process with new innovations concerning data management. On the other hand, the popularity of data-focused innovations has also enabled lenders to access the necessary data with permission from consumers, thus providing better offers and loan rates according to the financial histories of their consumers.
Fraud detection
While each financial institution has a certain system in place to handle and detect fraudulent activity, the potential for this process to evolve in the future is massive. AI systems are already used to detect fraud within a couple of seconds, but what if this process could be brought down to nanoseconds? As online transactions can be completed in a few seconds, faster solutions are needed for improving the safety and security of banking accounts, something we have yet to see in the world of financial technology.
Financial technology has evidently transformed lending for good. Providing higher speeds and security than ever before, consumers now have a number of financial solutions available at their fingertips, helping to accelerate and streamline the entire lending process.
