Money lending is a sector as old as time. It’s been around for decades and has shown no signs of slowing down.
However, it is constantly evolving with more metrics, numbers, and scenarios to consider. This means that the way money lenders operate has to evolve as well, and this is where financial technology comes in.
Here, we will discuss the fintech that you should be aware of, some of which you should already be using, amd others that are quite new.
Going forward, it is vital that you digitize any and all processes that don’t require face-to-face interaction. Pen and Paper lending is quickly going out of fashion and whether or not it will disappear completely, is up for debate.
However as the world catapults forward into a cyber age, people expect as much ease as possible, and a lack of online options can be a hindrance or even a dealbreaker altogether.
Therefore, if you want to reach as many people as possible, then this is an essential piece of fintech to invest in.
On top of this, it should speed up the process with current clients as well as potential ones by lowering the logistical barriers.
People won’t have to come in for every little step of the process. The minor things can be handled online, and in-person conferences can be reserved for only the most important events and sealing the deal.
To be more specific, digitalization would include things like online signings, video conferences, secure data transfer, etc.
The goal is to make these processes as simple and convenient as possible for the people who come to you so no matter their proficiency with technology, they can easily work with you.
Money lending expert and podcast host of How to Lend Money to Strangers, Brenden le Grange states, “Smaller money lenders are never going to compete [with big banks], so they have three basic options to become competitive: (1) they can create a user experience that is so good that the money they’re providing is no longer a commodity, (2) they can offer the best price to the right customers, or (3) they can make their internal processes so efficient that despite starting with more expensive capital, they can still end with lower prices to the borrower.
All of these require the clever use of technology.”
The digital world is gaining more traction, which is reflected in the assets people own, so you must invest in technology that adapts to this change.
It is undeniable that the blockchain system has revolutionized how the world operates and how people use their money.
This means that the factors used to calculate a person’s credit risk and the amount they can be lent is outdated and inaccurate. Deepak Shukla, founder of Pearl Lemon Accountants, agrees with this sentiment, he states, “It’s true that some people use cryptocurrency and the likes as a get-rich-quick scheme, jumping in and cashing out multiple times per week; however as time has gone on, more and more people treat it like a reserve.”
Depositing hundreds, thousands and more over extended periods as they would a bank but with the possibility of much higher returns than what most banks offer in terms of interest.
As a result, institutions should start recognizing and assessing these digital possessions as part of their assets.
This will give you a wider pool of potential clients as well as a greater possible size of returns.
Due to the blockchain-based system that most of these digital assets operate on, it is easy to track just how much people own and the legitimacy of their claims.
Even if you don’t wish to do it yourself or are unsure how to implement it in your credit calculating process already, there are many programs and companies that specialize in this already.
This means you have options so you can test different ones and find out which is the most suitable for you in terms of price and function.
There are some negatives that may warrant concern though, such as the market’s volatility, but most of them can be offset with restrictions and rules to protect your investment.
The digital assets are inevitable, so it only makes sense to get in now before it’s too late.
AI is a no-brainer in terms of investments due to its fantastic versatility.
It can sound daunting and overly complicated, but it’s honestly not that bad, and there’ a whole spectrum.
Artificial intelligence can be as simple as a chatbot with predetermined answers to respond to claims and questions from inquiring minds.
Even this straightforward process can have a huge effect. Similarly to digitalization, it reserves human consultation for cases that actually need it, leading to a more efficient use of human capital.
On the other end is using AI for more complicated matters, such as providing personalized quotes for individuals based on a wide range of data analyses.
The effect of this can be massive, but unlike the chatbot, for example, this requires much more investment.
Moneylenders deal with large sums of money, so even small mistakes can be costly; so if you are going to use an AI for something like this, then you need to make sure it is perfect, meaning you have to spend a lot of money.
There are many companies out there which you could buy such AI from or possibly even outsource to, which may be the better option as this means that this company will be tasked with maintenance which means less work on your side in the long run.
These are only 2 examples of the possible applications of artificial intelligence.
The list goes on with examples such as assessing credit risk, finding potential clients, identifying trends to find the best time to lend, and more.
Almost all the uses of AI work towards one or more of these common goals:
- Increasing profitability
- Increasing the number of clients
- Increasing the time available
These are only 3 of the most effective fintechs out there, but this is only the tip of the iceberg.
There’s a whole world of them for you to explore, all with different functions, methods, costs, etc. This is the beauty of technology – it is limited only by the ingenuity of the mind and is constantly one upping itself, so the range is vast.
So go out and find the best ones to compliment your organization’s way of operating!