Borrowers are evaluated using improved assessment methods
Traditional financial institutions look into an individuals’ credit history to assess their reliability as a borrower. However, the International Monetary Fund underlines that this model is limited, especially when institutions do not have enough access to hard information regarding an applicant.
On the other hand, FinTech solutions do not need access to a person’s credit history to gauge their trustworthiness as a borrower. These apps use artificial intelligence and machine learning to review clients’ online history and purchases. This data is more advanced and inclusive compared to relying on one’s credit history, which has been criticized for promoting racial bias.
The payment process is convenient for both lenders and borrowers
FinTech is so convenient that borrowers do not need to set up an appointment or drive for miles to deliver their payments. Once your borrower is ready to pay off their loans, they just need to access their phone to clear their monthly dues.
Furthermore, Marcus points out that automatic loan payments can be configured by clients so that their bills are instantly deducted from their bank accounts each month. Since their payments are automated, lending businesses won’t have to send out numerous reminders or suffer from late dues. This makes the lending process smoother and worry-free for both the lender and the borrower.
FinTech services are digitally secure
Plenty of businesses and clients hesitate to use online financial services because of privacy issues. Due to the rising cases of identity theft, many individuals sacrifice too much time and effort using traditional banking methods in the hope of more security.
However, FinTech solutions do not only use innovations to make the process fast and efficient, these technologies also ensure that each transaction is digitally secure. Case in point: PCI-compliant mobile payment providers are required to use encrypted servers to protect both the lender’s and the borrower’s data. In addition to that, customers’ credit card data and personal information are safeguarded through Card.io technology.
FinTech provides a lot of options and convenience for interested borrowers. As a result, lending businesses that offer digital services can expect rapid growth for the years to come.