At its core, financial technology – or fintech
– aims to introduce new tech that can improve and automate financial processes,
from payments to lending. The fintech industry has been exploding over the past
decade and continues to grow with every passing year, with an estimated $210
billion invested in fintech startups in 2021.
Although the majority of the fintech
revolution has revolved around cryptocurrencies, other parts of the financial
industry have not been left untouched. Many new companies emerged to fill the
gap for various financial services, such as lenders that offer online title loans.
As a consequence of the lack of ties to any
large financial institutions and not being subject to the same regulations, these
lenders were able to offer competitive loan products to consumers. Below, we
will take a deeper look at how fintech has impacted the instant loans industry.
With conventional lenders, such as banks and
credit unions, you are typically limited to borrowing specific products that
they offer – and rarely does it happen that these fit your specific needs. This
is not the case with online lenders, which offer a wide range of loan products
that allows you to tailor the loan to your particular financial situation.
What it means to you as the end user is that
you have a much larger chance of finding a loan that will work for you, whether
you need a short-term solution or something more long-term. While conventional
banks move towards more flexible lending products, they are still subject to
more regulations, meaning they can only move so fast.
Another huge advantage that online lenders
have over traditional financial institutions is the accessibility of their
products. With a bank, you typically need to visit a physical branch during
business hours to discuss your loan options – some banks offer online loans for
their customers, but the application process is often more complicated.
In contrast, many online lenders allow you to
apply for a loan entirely online in just a few minutes – no appointment
necessary. Plus, since most of those loans are rather small, you can even get
some of them without going through a formal credit check.
With that, the process of actually getting the
loan is also quicker with online lenders. Once you have been approved for a
loan, the funds can be deposited into your account in as little as 24 hours –
often even sooner than that.
This quick funding timeline is crucial for
many people who need access to cash as quickly as possible, whether it is to
pay an unexpected bill or cover an emergency expense. With a bank loan, the
process can often take days or even weeks – if you are approved at all.
Fintech aims to put technology into your
finances also when it comes to your solvency. Instead of relying solely on the
credit score – which, needless to say, is flawed in many ways – many fintech lenders
use alternative data when making lending decisions.
This can include standard aspects like your
employment history or bank account balance, but also other means like social
media activity or even shopping habits. It leads to a more holistic view of
your financial situation and can often lead to better loan terms.
Although online banking isn't anything new, a
good portion of banks and lenders still fails to catch up with the latest
security technologies – some still don't enforce 2FA (two-factor
authentication) for their online platforms, which is by far the most basic form
of online security.
With fintech lenders, on the other hand, you
can be sure that your data is well-protected on both ends thanks to
cutting-edge security technologies. This is essential when dealing with
personal data and financial information, which can lead to serious consequences
if it falls into the wrong hands.
Let's say you are just $100 short to pay your
rent this month and you really don't want to incur any late fees. Taking a
small loan would surely help you out, but you probably don't want to go through
a formal application process for such a small amount.
This is where peer-to-peer lending comes in –
you can take a loan from another person directly, with the deal being
facilitated by an online platform. Although this is not exactly a new concept,
it has only become possible on a larger scale with the help of apps like Cash
Such an approach can be beneficial for both
parties – the borrower gets access to quick cash without any hassle, while the
lender can earn some extra interest on their money.
While this doesn't specifically concern online
loans, it should be noted that fintech companies are leading the way when it
comes to new forms of payment. Tech such as one-click online payments have
already become the norm in many industries – and that's just the beginning.
As controversial as it may be,
cryptocurrencies are also gaining traction as a means of payment, with more and more
businesses starting to accept them, creating a new ecosystem of digital
currencies. Even if you are not particularly interested in cryptocurrencies, it
is hard to deny that they have had a profound impact on the financial industry
as a whole.
Finally, it should be mentioned that fintech
startups are often known for their outstanding customer service. Since many of
them have to fight for every single customer, they go the extra mile to provide
an excellent experience and help you with whatever issue you may have.
This is in stark contrast to many traditional
financial institutions, where it can often be hard to even get in touch with a
customer service representative – and even if you do, they are not always able
or willing to help. The difference in customer approach is one of the main
reasons why fintech is quickly gaining popularity.
There is no doubt that fintech has changed the
financial landscape, and online loans are just
one example of that. Whether you are looking for a quick cash infusion or a
more long-term solution, fintech lenders offer competitive products that can be
tailored to your specific needs.
But that isn't to say that fintech will take over the financial industry completely – there is still a place for traditional lenders, especially when it comes to more complex products. With that, more and more fintech solutions will be integrated into traditional financial services, making the industry as a whole more efficient.