Technological innovation is rapidly changing the countenance of every single industry and the lending segment is not an exception as well. Although, till years back, lending exclusively happened to be the prerogative of banks and credit companies, nowadays, loans are getting extended to consumers and entrepreneurs also by innumerable Fintech companies whose novel practices are widely transforming the loan process.
The essence of instant loans
Instant loans, for the most part, are personal loans which are almost instantly delivered within a span of one succeeding day. These loans, in the present times, are related to Fintech organizations to a great extent, as customary lenders such as banks and financial foundations don’t provide personal loans on an instant basis as it takes them 7-8 working days for the end-to-end loan application and disbursement process to be completed.
How do Fintechs work?
The conventional model of loaning adopted by banks since quite a long time was to accept and acknowledge deposits from a few customers and extend the deposits as loans to different customers. With a view to earning money through this model, banks used to typically charge higher interests from the borrowers than what they paid to the account holders.
With a revolutionary concept of peer-to-peer lending Fintech companies have overthrown this traditional archaic process. Basically, they have developed a community venue where individuals gain by earning interest by lending to other individuals. And a small brokerage is charged for expediting the connection. As opposed to presenting a conventional application, here borrowers can secure loans by sharing convincing stories of why they require the capital.
What are the prime success drivers of Fintechs?
Latest statistics reveal that Fintech companies have usurped the bulk share of the personal loan market and even transcended the market stocks of leading financial lending firms in a big way.
Firstly, they have virtually overhauled the entire borrowing process, starting with the application of the loan until the final stages of sanctioning and disbursement.
Secondly, the remarkable simplicity in the loan application procedure together with the flexible eligibility criteria has catapulted the Fintechs as the foremost choice among unsecured credit seekers.
Thirdly, the superior interfaces and notable technological integration and innovation have assisted Fintechs in widening their reach and exposure.
The high-speed application process is the most significant factor which has led Fintech firms to destabilize traditional money lenders in this cut-throat market arena. The typical turnaround time for every loan application is maximum 24 hours. Regular financing companies take over a week’s period to dispense a personal loan.
Listed below are the salient features that launch Fintechs as the most preferred choice for instant loans.
1. Immediate approval of loans
Applying for an instant loan with a Fintech has never been so brisk and simple. You can hope to get an immediate approval or dismissal depending on specific aspects of your credit profile. A few key parameters that decide the initial approval or rejection include income, present organization (listed/unlisted), age and finally credit score. Risk assessment algorithms are applied by a majority of companies to assess in real-time the credit profile of the borrower and ergo bring about approval or refusal.
2. Digital validation of documents
The positive side to selecting a Fintech company for the purpose of availing an instant loan is the seamless digital application process and successive verification. For example, a loan application from Fintech allows you to complete the process online from start to end.
After all, automation helps to lower the operating costs, permitting Fintech companies to provide loans to borrowers at competitive rates. Once you upload your identification, income statement and residential address proof, the document will be digitally validated thereby sparing you from the trouble of physical submission.
The procedure is so smooth and advanced that a physical visit by an executive to collect the documents and verify your details becomes unnecessary.
3. Same-day disbursal of loan
If you are of the idea that the concept of instant approval of loans is the best feature of Fintech companies, you need to delve deeper to find something more exciting, which is the proverbial “icing on the cake”.
Once the digital verification of your documents is completed successfully, the loan will be sanctioned and disbursed on the same day itself. This is a ground-breaking advancement and a far cry from the traditional loan disbursement practices (lengthy document collection and verification process) espoused by major banks.
4. Heightened focus on security assurance
As the Fintech lendings are fully technology-driven, you get increased focus on safety as far as your personal details are concerned. The companies are empowered with the finest quality tech measures to safeguard the consumer details. Especially, Fintech lenders employ tokens to engage in a brief verification of data from third-party vendor sites instead of lifting and preserving them.
5. Data utilization to ascertain borrower credibility
It is imperative for you to know that Fintech companies while offering instant loans utilize an extensive number of data points to determine how credible a borrower you are in terms of loan repayment. Fintech lenders incorporate data from multiple social media websites and crunch them in seconds to comprehend the borrower’s creditworthiness and repayment likelihood.
6. Loans to applicants from unlisted companies
A noteworthy reason behind the numerous loan rejections which many applicants experience is the fact that their company or employer doesn’t belong to the list, which top lending institutions have in their database. Applicants working in listed companies only become eligible for loans.
However, Fintechs don’t exhibit much stringency in this particular eligibility criterion. Therefore, even if you work in a suitably established startup that couldn’t make it to the list, you can rest assured that the Fintech wouldn’t reject your application at least based on this particular parameter.
7. Loans to paying guests and tenants
Fintechs have begun offering credits to individuals who live in shared accommodations or as paying guests. Private Banks, on the other hand, don’t comply with such schemes. So, on the off chance, you put up in a shared facility and have been so far reluctant to apply for a loan, fearing an instant rejection, resort to Fintech lending to fulfill your necessities.