In modern times, the financial industry uses more technologies than ever before and this is something that has begun to change the way that people look at lending opportunities. Whether you are a lender wanting to figure out if a potential loan recipient is a worthwhile risk or you are a consumer applying for a personal or business loan, this change to financial tech has likely changed your views of lending.
When you're not alone. So, how has financial technology changed the public's perception of lending?
With the banks being the ones who traditionally offer business and personal loans, they are the top option to go to when you want a lender. However, with the reputation of the banks not being so high after the financial issues of the past decade or so have come to light, they are not the first choice for many people as they once were.
With the financial technology and websites like Become, which allow for online lending opportunities, and the use of big data to allow for more people to qualify for loans, the public seems to be liking the changes that have come about.
Role of Big Data
When online lenders want to see if a person should receive a loan, they don't look at their FICO or credit score like banks would. This is not an accurate indicator of whether a person might default on their loan, but a bad credit score would not allow you to qualify for a loan at a bank.
Online lending uses big data to determine the risk of the person’s default, which takes a lot more information in their financial history into account. This means that you could qualify for a loan that you wouldn’t have been able to before. This has made public opinion soften.
Regulating Financial Tech
However, though there seems to be a huge push for newer technologies to help smooth out the operations of many businesses, with that comes the responsibility of creating regulations that guide the use of that technology. You don’t want just anyone getting your information online when you’re applying for a loan, this is a growing issue that people want to have addressed.
The regulation of such tech is something that has been brought to the public's attention, and being is a bit wary of it. However, this seems to stem from the fact that not many know as much about this topic and they would like.
So, though there is a lot of attention to the idea of having more financial tech, the average person doesn’t seem to know what that would look like or how that would affect them. Having regulation for it would be a good start to put people’s minds at ease when choosing to take a loan from a lender.
Financial tech is still a pretty new concept that is being implemented in business, and not everyone knows what to think about how this will affect lending. Many still feel like this could put their information at risk, but with more research and media exposure, it is believed that the public will come around and embrace the role of tech in finance.