Two thirds of the world have access to digital banking and this means that the world of lending is experiencing a significant shift. The days of putting on your best shirt, heading down to the high street and charming your local lender into handing over cash are long gone. Everything is instant, digital and less personal. With improved technology, loans are easier to acquire, cheaper, faster to pay back and accessible to more people. Here is how to use your WiFi connection to get the funding you need to pay unexpected bills or start a new business venture.
Removing Third Parties
Where do banks get their money? This is an age old question, which few know the answer to. In fact, 84% of British lawmakers were confused about this subject. When banks lend money, they actually have to create the funds, seemingly out of nowhere. Much of the rest will come from other customers. This is an unstable and risky business model. With the rise of lending apps, third party bank managers and risk assessors are removed. Peer to peer loans allow you to receive money directly from another customer, who will receive the money back with interest when you repay. This cuts time and costs, while improving accessibility.
More Accurate Vetting
When applying for credit or loans, you may have been faced with a lot of paperwork. You will have to submit your credit score and wait for a human loan provider to go through it.
With improved technology, this is less necessary. Artificial intelligence can use big data to scan applications and approve loans almost instantly. Machines can make accurate decisions about assigning credit based on the cold, hard numbers. This cuts down approvals for unreliable borrowers, while allowing trustworthy applicants to receive the funds they need.
Cutting Costs, Increasing Opportunity
Digitally acquired loans, by using AI rather than humans and data rather than paper, are always the cheapest option. This keeps interest rates down, allowing more people to be able to afford to take out a personal loan. Furthermore, there are apps which can track spending habits, ensuring that you always have money set aside for loan repayments. Utilizing technology in this way means that you will never miss a payment and can therefore maintain a strong credit rating.
Online banking, big data, and money tracking apps are opening up the world of personal finance to everyone. By using alternative lending platforms, you are more likely to acquire a loan and can do so for a cheaper rate. With emerging cryptocurrencies and decentralisation of finance, more opportunities for improvements in this area could be just around the corner.