Rapid digitalization, accelerating internet penetration and the global pandemic have increased business operations and customer expectations. No industry or sector remains immune to the transforming effects of digitalization, not even the ‘neck deep in paperwork’ finance industry.
The addition of the suffix tech to finance has disrupted how the financial industry lends and borrows. With quick approvals, short-term loans via mobile phones, instant digital loans and transparency, the fintech sector is leapfrogging the gaps in the traditional lending process.
The emergence of online lending platforms, peer-to-peer personal loans and other innovative fintech models has brought financial security and independence within the reach of previously underserved customer segments.
These online lending platforms and fintech start-ups are leveraging start-of-the-art technologies and data sciences to innovate, streamline and secure the lending process. With numerous security and privacy challenges, technology and data sciences are also making digital lending safe.
CONSUMER’S CREDIT HISTORY
For as long as one can remember, banks and traditional lenders have relied on credit scores and collaterals to assess borrowers’ creditworthiness. But as technology advances, many lending institutions are leveraging trended data to evaluate a consumer’s credit history. A credit score more often than not serves as a mere snapshot in a consumer’s credit history.
Trended data allows lenders to understand a borrower’s behaviour over the passage of time, whether it is improving or deteriorating. As a result, they are able to get a holistic and detailed view of the consumer’s credit history instead of simply rejecting them on the basis of credit score.
IDENTITY AND CYBERSECURITY
As the bulk of transactions become digital and consumer data continues to grow exponentially, cybersecurity and identity protection are becoming more critical. In this age of data ubiquity, platforms collect consumer data across various touchpoints to provide an omnichannel experience.
As a result, it becomes challenging to manage these digital identities and ensure cybersecurity. Digital lending platforms are deploying security protocols and technologies like Artificial Intelligence (AI) and Blockchain to strengthen their cybersecurity and prevent identity cloning and hacking. By embedding these technologies, it becomes easier to detect and expose data threats and establish trust and transparency with their customers.
Banks are infamous for their time-consuming loan application and approval process. As a result, consumers struggle to acquire needed funds in times of crisis and emergency. During the outbreak of the coronavirus pandemic, many consumers turned to digital lending platforms to obtain loans.
Given their quick application process and instant loan disbursals, many consumers who were not able to procure loans timely earlier received the funds promptly. With advanced technologies, these lending platforms are able to assess consumers’ creditworthiness instantly and provide quick approvals.
INSTANT LOAN DISBURSAL DIGITALLY
In the age of digitalization, when countless services and products are being delivered to the consumer’s home, online lending platforms are helping consumers get loans digitally. With their robust networks and secure platforms, disbursing loans digitally has become safer and more reliable. Consumers can receive instant loans in a few clicks via their mobile phones. These digital lending platforms operate 24×7 and provide seamless and paperless loan disbursal for consumers’ short-term needs.
With the massive heaps of data available today, it is extremely easy to gain insights into customers’ confidential financial data. As transactions become digital and remote, managing and protecting data becomes challenging for lending institutions.
With the help of biometrics, one-time passwords (OTP) and AI, online lending platforms are building a secure and robust framework to ensure that consumers’ valuable data is not exploited. By embedding data security through each phase, these platforms are addressing conventional data challenges and redesigning security architectures.
As the world continues to evolve and our lives become increasingly digital, modernized technologies are streamlining cumbersome processes of lending and borrowing. But as fintech rides the wave of technological transformation and digital innovation, safe and secure lending becomes imperative to enhance customer experience.
With the help of advanced technologies, data sciences and digitalization, the lending market is moving towards change. By leveraging state-of-the-art technologies, fintech platforms can establish data privacy and security to make digital lending safe and ubiquitous.