Moving The Personal Loan Market Upward Through Fintech

Most people around the globe look into taking out a loan for different intents. Some loan for business startup or operation costs, some for educational purposes, for paying off debts, or for other personal use. At times, people take out a loan because of insufficient funds to settle expenditures that are unforeseen. The American Pride Legal Funding, for instance, offer loans for vehicular accident settlement. People do find such loans quite beneficial.

In fact, the market on personal loans has attained a record high in 2018, as the promising industry of financial technology has made financial services through mobile apps more convenient and accessible to consumers.

The Growing Fintech Companies 

As per data by TransUnion and reported on CNBC, the market on personal loan has gone up to 138 billion US dollars in 2018, an increase of 17% year over year. Lending through fintech comprises 38% of personal loans altogether, an increase from only 5% in 2013. This indicates that fintech companies are growing.

By means of making use of innovative techs, companies of fintech are providing modified or tailored products that are low-cost, which brings about a considerable bearing on the increasing expectations of customers, together with the intensifying pressure on firms that are traditional.

The Department of Treasury of the United States issued a report in July wherein it states that over 3,300 companies of fintech began from 2010 to 2018 wherein investments in these fintech startups are speedily growing. Fintech companies’ worldwide investments in 2017 arrive at 22 billion US dollars. Fintech companies are the major mover of the growth of the market of personal loan.

Debt in the American Household

Many Americans are buried in debt, with increasingly more individuals incapable of settling them. Debt on student loan in 2018 arrived at a new high of 1.5 trillion US dollars; next to it is debt on auto loan at 1.1 trillion US dollars, and debt on credit card at 977 billion US dollars. As per Forbes, the average sum of debt that an American household has is 133,568 US dollars.

For individuals borrowing loans that are subprime, either due to poor credit score/history or low-income, the dangers are the greatest in the event of an economic crisis or collapse. As reported by TransUnion, these borrowers, who put their occupations or work hours on the line is likewise rising rapidly at 4.3% year over year.

Technology-based Solutions

The high utilization of mobile devices as well as solutions that are technology-based is driving the need for banking and financial solutions, wherein personal mobile devices are used to access such solutions. Because of this, financial institutions and companies are greatly capitalizing in solutions that are technology-based to measure up with modern companies of fintech.

A vast majority of worldwide banks, investment managers, as well as insurers are intending to collaborate and partner with companies of fintech through the next three to five years, and are expecting to have an average of 20% ROI on their ventures.

The Unceasing Growth And Development Of Financial Technology

Whether its shopping for new clothes, buying a meal or coffee at your local café, or taking out a loan on lending platforms like www.xn--forbruksln-95a.com/, financial technology or popularly known as fintech is now universally used.

Fintech has been utilized and applied onto numerous of the latest developments in technology such as payment applications or gateways, lending platforms as well as digital currency.

Merging the newest developments in tech with financial applications and services, fintech has aided and assisted many companies and businesses to provide and deliver financial services that are better and more reliable to consumers and other businesses and companies as well.

What is Fintech?

A portmanteau of the words financial and technology, fintech is utilized to describe an industry incorporating and embracing the use of any form of technology for financial services or management, including applications for mobile payment, peer-to-peer platforms, insurance and investment as well as cryptocurrency to name some.

Fintech, in general, refers to any business or company making use of the internet, computer, mobile or other electronic devices, cloud or software technology to connect and carry out any financial services. Numerous products on fintech are intended to connect the finances of consumers with technology for convenience and ease of use and access, though the word is applied to technologies in the B2B sector as well.

Initially described as technology used in the back-end systems of financial institutions like banks, fintech are now more focused on the consumer. At present, because of the developments in fintech, managing finances, trading in stocks, paying for commodities via this technology is now possible.   

As per data from 2016, individuals utilize one to three applications to manage their funds. And as per CNBC, in 2017 alone, investments on fintech shoot up to 18%.

Fintech also cater to the estimated 2 billion individuals without bank accounts globally by providing a smart alternative to take part in financial services that don’t need any brick-and-mortar. Through technology that is user-friendly, fintech then allows consumers to access directly their financial lives.

How is Fintech Used?

So how is fintech used? Here are few examples:

Platforms for Crowdfunding

Crowdfunding platforms permit users to either receive or send money to others. Moreover, these crowdfunding have given businesses as well as individuals to pool finance from a multiplicity of sources in the same platform. Rather than taking out a loan from a bank the traditional way, it is nowadays possible to directly reach out to investors for funding of a project or venture.

Mobile Payments

This generally refers to payment services done over a smartphone or mobile device and works under financial regulation. As an alternative to cash, credit cards or cheque, consumers could now make use of technologies on mobile payments to pay for an extensive array of services as well as commodities.

Budgeting Applications

In 2019, the most widely used fintech technology that consumers use is budgeting apps wherein over the years has exponentially increased in popularity. There was a time when consumers had to make their own outline and template to manage and keep track of their finance. With fintech developing tools and apps for budgeting, with fintech, consumers could now effortlessly as well as efficiently manage and monitor their income, expenses and savings.  

The Peer-to-Peer Lending Platform

Peer-to-peer or P2P lending is the wonder of online lending created by platforms wherein borrowers are directly matched with lenders, such as the envestio review. It is quickly getting traction as well as expanding to more categories of new products since it grants a better experience. Moreover, it forwards the advantages of making use of technology to both borrowers and moneylenders.

Peer-to-peer lending has come to be a sector where the growth increase is quick and where billions are annually generated in loans.

P2P Lending Platforms

A platform for P2P lending that is successful has a good foundation, is flexible as well as an efficient technology that would surpass the expectations of both the borrower and the lender.

Typically, with regards to borrowing and lending money, the process involves a credit union or a banking institution; however the rising popularity of platforms for P2P lending is seeing several individuals do away with these traditional financers from the borrowing and lending process altogether.

Because of the advancements in technology, it made connecting through online platforms simpler and easier for businesses and/or individuals who are considering directly borrowing or lending money with one another.

P2P lending is an alternate for the traditional financing processes. Since it matches up individuals who or businesses that are considering borrowing or lending, it enables them to make arrangements directly between each other.

Platforms and/or websites offer a service that is intermediary wherein it does the matching between the borrowers and the lenders and borrowers. They also carry out relevant and reasonable steps for risk assessments as well as credit checks. Usually in these platforms, a certain fee is charged for the services they have rendered, which isn’t part of the final lending arrangement.

Pluses of P2P Lending Platforms

  • Numerous lenders are drawn towards peer-to-peer solutions because of the possibility for their investment to have a high rate of return. Typically, the estimated yearly rates could reach up to 6% (or even higher) in packages that are performing better.  This potential becomes more attractive as compared to the rates that are normally offered by bigger banks with standard savings accounts.
  • On the other hand, lower interest rates are likely to be obtained for those looking into borrowing money via P2P lending platforms than traditional loans depending on the credit history of the borrower and risk factors.
  • Peer-to-peer platforms and solutions for borrowers and lenders are billed as something more responsive, transparent and efficient to manage as compared to banks, since they are unfettered by the bureaucracy as well as ageing technology that is the stamp of numerous institutions that are bigger.

Financial Technology Loan Options For Small Businesses

Technology is the biggest trend influencing every industry today. In the world of financing, financial technology or fintech is among the biggest evidence of this generation’s technological revolution. Financial technology is beginning to revolutionize the financial industry, the same as the impact of the Internet in almost every industry. Need Money Now is just among the Financial Technology made available to small businesses.

What is FinTech?

FinTech (Financial technology) generally refers to any business that uses contemporary software and technological know-how to apply its groundbreaking work to financial services. Contrary to general knowledge, financial technology has been in development for 65 years, leading to the continued success of the industry in financial technology. Following the establishment of credit cards in the 50s, the industry began to hold a genuine part in the financial industry, and since then, the advancement of the fintech industry has improved rather quickly.

In 2008, although financial technology played an important part in our society, the financial crisis at that time was hugely attributed to the vast and intense expansion of the industry. Since the financial crisis, a large number of Americans have become angry with the banking system, creating doubt for banks in just about any country. Distrust on banks has eventually become worse when banks stopped lending following the recession. As a result, many people in the business arena and in practically all sectors were considering alternative and private lending institutions.

As the economy has at last rebounded, consumers are however cautious about binding financial institutions. Today, the financial technology industry is more trusted as a reliable source of funds and other services due to the urgent need to seek technology alternatives.

Today, more advances in the financial technology have taken place with the introduction of bitcoins or what has been known as cryptocurrency.

Financial Technology Loan Options

FinTech Mid Prime Loans

The most recognizable form of FinTech form of financing for small businesses is medium loans or mid prime lending. The price offered by FinTech’s medium-term loans is viable with a classic bank and SBA loans, however with less of the hassle that’s commonly linked with each kind of financial loan. Online FinTech lenders do not need to contact banks and provide a wide range of personal and business financial documents, but they can easily qualify applications in a matter of minutes and can provide funding very quickly (within a few days after an application had been approved). All this can be achieved with the least amount of documents that are traditionally required by the banks.

Invoice Factoring via FinTech

Financial technology invoice financing can be described as a means for small businesses to work with their 30-90 days unpaid invoices to get funding. The factoring company forwards a small amount of the invoice to a certain percentage of the invoice value less the fees after which forwards the final figure to the borrower after the invoice is settled.

Cash Advance Via FinTech

Cash advances through Fintech are not loans. However, it is the future earnings of a company sold to FinTech lenders in return for upfront funding. These future earnings are sold at a discounted price to the funder. Lenders associated with Fintech evaluate the cash flow of a company by taking a look at bank statements which includes credit card statements. This is for them to figure out the total deposits as well as the consistency of deposits.

After the FinTech funding company determines the maximum amount that a small business can easily manage, they are going to compute the amount of money the business could get depending on the repayment structure in 4 to 21 months. Following the financing of a small business, FinTech’s prepaid cash lender will receive a repayment every business day but some will collect weekly by means of ACH through the bank account of the small business or the percentage of daily credit card processing trades accumulated every day.

SBA Loans

SBA loans are not generally linked to financial technology, but as a result advancements in many sectors of our society, specifically the financing industry, lenders can now qualify applications for SBA loans in just minutes and fund SBA loans at the quickest possible time, approximately 7-10 business days.

Technology has streamlined the SBA loan processes which allowed business owners to obtain bank financing within a time frame in line with competitive alternative lenders and actual investors. There are many forms of Fintech SBA loans. This includes lines of credit and term loans. Fintech SBA loans can be used as working capital, purchase of real estate investments, debt consolidation, business expansion, and much more.