Today, people are more connected than any other time in history. Since people are constantly using computers and smartphones, most industries have adopted technologies that help in easier and faster service delivery to customers.
In the finance industry, the development of technology has transformed the landscape in the lending sector. In this article, you’ll learn more about how this industry has been affected by technology.
Technology creates better borrower experience
Basically, the lending process requires an exchange of some data between the borrower and the lending institution. Depending on the lender and the amount in question, you may be required to submit tens of pages of information before the application is approved.
As such, the process can be daunting given that you are expected to fill multiple forms as well as provide several documents. Without patience and some free time, getting through the loan application with traditional banks is close to impossible.
However, when the lending process is digitized the amount of paperwork is reduced dramatically. This is because account activity, credit history, income history as well as tax compliance can be fed into the system with the click of a button. This has made the collection and verification of information quite easy. Besides streamlining the application process, the amount of time it takes to get a loan has also reduced.
In addition, some lenders have developed some innovative mobile solutions that enable customers to submit an application from anywhere. The most outstanding feature about mobile loans is that there is a constant interaction between the lender and the borrowers. This goes a long way in improving service delivery.
In the past, borrowers had no access to a lender’s system that hold the borrower’s personal details as well as loan application status. This implies that most borrowers were in the dark for the most part of the lending process. When the need to communicate comes, the loan teams were the most potent option. This has been the reason why loan officers were getting hundreds of phone calls from clients who were dying to get the updates about the loans.
Courtesy of technology advancements, now it’s possible to view the status of your loan application as well as your account status with a lender. This helps borrowers to stay updated during the entire online installment loans process. In addition, you can get instant communication about any requests that a lender may have that is critical to the borrowing process.
As a result, there is a high collaboration between borrowers and lenders which makes the involved parties satisfied.
A less painful borrowing process
Traditionally, it takes an average of 18 days to get a loan approval. To get through the borrowing process, you need an extra 50 days if you are applying for a mortgage. But when you consider that it’s possible to purchase something from miles away at the comfort of your home and get it in a few hours, the long lending process seems like a bad joke.
To match the level of service delivery in this digital era, the financial sector has incorporated technology for a better experience. The innovative technology makes it possible for borrowers to navigate through the process thanks to great design and real-time customer support.
This makes it easy to switch from traditional lenders who implement outdated technology and business models. The comfort of knowing that you can get help from the lender in a matter of seconds has made the process painless.
It helps you save money
On average, a lender spends about $8,000 to finish one mortgage. This is because they have to pay employees to look into tons of information and collate in various databases. In a manual process, the tasks are repetitive and consume a lot of time. The tragedy here is that the borrower will cover these costs in the form of loan fees and charges.
But when innovative technology is used, much of the redundant tasks during the application process is scraped off. This means borrowing becomes cheaper for both lenders and borrowers. Besides the huge savings on cost, the process takes less time.
Over-reliance on human capital is eliminated and this implies there are fewer errors when gathering information. While this doesn’t conclude that technology has taken the place of experienced manpower, it helps create time and resources that are focused on other tasks with higher value.
Risks associated with technology in the lending sector
While technology has a way of making life more bearable, it comes with several risks. Basically, most of the information is transmitted online and this makes it easy for criminals to intercept the information. With data security being one of the biggest concerns in this industry, most companies are investing heavily in precautionary measures to keep their customers safe.
Therefore, if you are working with a reputable loan company that has implemented the necessary safety measures, you don’t need to worry. However, this doesn’t mean that you should submit a loan application to every online lender out there.
All lenders are not created equal and there are a few predatory businesses out there that can take advantage of vulnerable borrowers and charge astronomical interests. As such, you should restrain yourself from getting into an agreement with any lender who doesn’t have a track record of outstanding customer service and a demonstrated commitment to helping customers.
Finally, identity theft is real and can cause a serious problem if a criminal gets your personal information. Therefore, you should be careful when requesting loans through online platforms. As a rule of thumb, choose to work with businesses that have strict privacy policies as well as having the necessary security measures to prevent data theft.
Innovative technology has taken the financial industry by a storm and it has created a serious revolution in the industry. Unlike in the past, loans are now easily accessible to more people and the lending process is less painful.
Considering the current trends, it’s clear that more resources are going to be invested in this industry and create better technologies. While there is still much that needs to be done with regards to improving certain loans like mortgages, technology has transformed the sector.