Planning to start your own business but lack the initial capital? Worry not, the days when you had to wait for months to hear back on loan applications are long gone. Fintech companies got your back these days.
Remember those days when you applied for a loan and had to wait for months to get a response from the bank? Moreover, if you didn’t have the perfect credit score, you also had to worry that you only had a 50% or less chance for your application to be approved. Well, it seems that these days are long gone thanks to the new Fintech players that have joined the financial market.
But why is there such a huge hype about Fintech companies? Financial technology has been in our world for more than you would imagine. However, it is only a few years ago when Fintech players have actually entered the financial industry. These days, Fintech companies create real competition for traditional and well-established banks. Why? Simply because they offer more of what today’s modern customers need and want. From offering personalization to services that can be easily accessed through any smartphone and outstanding customer service, Fintech players sure know how to attract young customers.
But, as an aspiring entrepreneur, why should you care about these companies? Well, if you need to get a loan to invest in your business, the good news is that Fintech companies can make it extremely easy for you. Here’s why:
How did the loan process change?
From getting loans as fast as getting a new haircut to having an easier lending process that is more accurate, Fintech companies have completely reshaped the lending process these days.
What is different? First of all, for many years before Fintech companies started to lend money to businesses and individuals, traditional banks and bureaucracy went hand in hand. From going to the bank to talking to the bank’s employee, filling in an application, and spend a lot of time gathering the necessary documents, the lending process used to take weeks or even months. Moreover, let’s not forget about the emotional pressure of waiting for approval from the bank. And, if your application didn’t get approved, you had to go all over again through the same process with a different bank, and another one if necessary.
Yet, nowadays, the lending process has become simpler, faster, more accurate, and more convenient for customers. It all starts with getting online where you can find and compare business loans from private lenders. Plus, businesses can only fill in one application that is sent to multiple Fintech loan providers. Moreover, you no longer have to spend a lot of time and get a hand cramp from filling out a pile of forms and applications.
These days, customers can enjoy a paperless application process as Fintech companies offer them the opportunity to apply for a loan online. And, since all your data and information is in a digital form, you can imagine that the waiting time is significantly reduced because your information is easily processed by advanced software programs.
As for the approval process, today’s technology used by Fintech companies can calculate risks much faster which allows you to get a response in less than 24 hours. So, for businesses that are at the beginning of their journey, getting funding fast is a major plus.
Lending options are now personalized
As mentioned before, traditional and well-established banks can’t really keep up with the fast-changing trends among consumers. This is why they also often fail to provide customers with tailored solutions that fit their needs and requirements. Especially to those tech-savvy young consumers who prefer to have all the services they need on their smartphones.
Whereas, Fintech players are all about offering great customer service. For example, Monzo, a bank that functions exclusively online, has created a community forum and a dedicated Twitter (News - Alert) account where their customers can leave their recommendations and feedback on how the company can improve its services and which new features it should create.
So, this type of client-oriented approach is a huge plus for Fintech loan providers compared to traditional banks. And, since no business is similar and each of them has different needs, these days, Fintech lenders can use technology and their customer-centered mindset to offer their clients tailored financing solutions that suit their needs.
How lenders asses risk today?
Another difference between Fintech companies and traditional banks when it comes to the lending process is the fact that Fintech players understand that clients represent more than just a credit score.
Before, calculating risk was a tricky process that will often become a disadvantage for those applying for a loan. Not only that customer information was not as widely available as it is today, but there was also a risk for human errors when assessing the risk of a potential client. Also, traditional banks also used to have very strict acceptance criteria which made it nearly impossible for certain categories of applicants to get a loan.
Whereas, Fintech companies use advanced software programs that analyze information extremely fast and more accurately. Moreover, apart from the faster and more accurate process, modern loan providers also consider the bigger picture when assessing risk in a potential customer. They analyze data represented by other variable factors such as financial responsibility and spending patterns and behavior. So, this way, aspiring entrepreneurs who have a poor credit score but a great business idea will no longer be rejected and will be able to get a business loan.
The easier, faster, and more user-friendly lending process was the solution that people needed and waited for a long time, especially aspiring entrepreneurs who are trying to set up their own business. What sets Fintech market players apart from traditional banks is the fact that they have an efficient scoring system, they have a client-oriented approach and use technology efficiently for the assessment of borrowers.
