Consumers are being empowered by fintech companies to take control of their financial lives. They are increasing financial literacy by raising financial awareness.
It is destroying the monopoly that traditional banks once had by making it easier for consumers to obtain financing through advanced digital financial technology.
What distinguishes fintech firms from traditional banks? To make your lives easier and better, they are combining traditional financial services with the latest in digital financial technology and Big Data.
What impact is the fintech industry having on the loan process?
What do you usually do when you need a personal loan? You’re thinking about going to a traditional bank or a financial institution, right? However, the process can be extremely frustrating.
The eligibility criteria are difficult to meet, and the paperwork is simply too time-consuming. While you were struggling to get a personal loan, the fintech industry emerged to forever change the lending process.
Fintech companies are new and advanced, but they aren’t as picky as traditional lenders.
Here are some of the best aspects of Indian fintech companies:
1) Improved lending models
Traditional banks and financial institutions accept deposits from customers and then make loans to those in need. How do they make money with this model? Borrowers are charged higher interest rates than savers.
With peer-to-peer lending, the fintech industry has managed to destabilize the bank’s authority. Fintech startups have developed a platform that allows people to earn interest by lending money to those in need.
A small fee is charged by a fintech startup to connect the lender and the borrower. Rather than traditional applications, the borrower submits compelling stories about why they require a loan.
2) Underwriting process automation
Traditional banks continue to rely on humans to carry out the underwriting process and profile risk assessment. Both of these processes have been automated by fintech firms. This expedites the personal loan application process.
The use of financial technology to manage the underwriting process reduces operating costs. That is why fintech firms can offer their borrowers competitive interest rates.
3) Faster and more straightforward approval and funding
Another feature that distinguishes fintech companies from traditional banks is their speed of operation. They provide faster application, approval, and disbursement.
A traditional bank’s loan approval process could take weeks. Fintech firms can do it in a matter of seconds.
4) Improved data utilization
Fintech companies use a large number of data points based on your online interactions to ensure that you have the financial capacity to repay the loan.
5) Strong security system
Lenders in the fintech industry use advanced technology to ensure the security of your personal and financial information.
They use tokens to view your data from other sites and have no option to save or store it. As a result, there is no possibility of them using your data for any other purpose.
Other security measures, such as encryption and website security, are also used to protect your data.
6) Offerings of unique financial products
Fintech firms have entered the financial services industry by offering unique financial products such as personal loans, student loans, business loans, marriage loans, consumer durable loans, two-wheeler loans, vehicle loans, and debt consolidation loans. As a result, the financial services industry has seen healthy product expansion in lending markets.
7) More Borrowers, More Loans
The new fintech lending model has created opportunities for people who previously struggled to get a loan approved from traditional banks, such as small business owners. These small business owners now have the opportunity to obtain an unsecured loan (one without collateral), which was previously unheard of.
The fintech sector has been successful in challenging traditional banks’ status quo. It has a promising future because people today have a more flexible way to borrow money in less time. Pirimid Fintech helps banks, NBFCs and Fintechs in digitizing their end to end lending journeys or improvising their existing journeys with its sophisticated solutions such as E2E User Apps, OCEN, Account Aggregator, Underwriting, Early Warning System, etc. This helps them to strategically grow their loan book size with Pirimid’s customizable solutions.