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The Future of Lending: How Technology is Shaping the Loan Industry

Home Business Magazine Online

The world is at an intensely interesting time in history with the development of new technologies such as blockchain and Artificial Intelligence. These technologies are shaping the direction of change in many industries, such as banking and finance, which is affecting the future of lending perhaps most of all. 

Fintech Solutions for Loan Applications

Financial Technology (Fintech) is being used to make the process of loan applications from lending websites much easier. Lenders can use the latest versions of Loan Origination Software (LOS) to pull together information on the finances of loan applicants. They can bring in other information that relates to the borrower, such as their utility information and address confirmation from the electoral roll. 

Being able to access all of this information quickly and leveraging real-time data analytics to sort through it, transforms how loans are provided, not just in the UK but around the world from loan industry websites. The future of the financial services sector is both data-rich and cloud-based. The advances in blockchain technology are now allowing for much more secure transactions as well.

Speedy Disbursement and Instant Approvals

This use of fintech allows for more comprehensive checks than ever before on the financial status of individuals applying for loans. It can even allow for rules-based decisions to be taken automatically, depending on several different factors and how they interact together. In this way, decisions can be made on a much faster timescale, and employees can free up some of the time that these tasks might otherwise have taken them. They are able to offer very quick loans to their clients.

The faster disbursement of loans is something that the industry has aspired toward for some time now, and the technology underpinning this is now finally at the stage where it works at the required level. It is now possible to approve loans instantly when people apply online and meet certain criteria. 

Personalised Loan Solutions

The more extensive use of data that the latest generation of fintech solutions has enabled means that consumers can be offered much more personalised loan products based on their own unique financial situations. This is a game changer for the future of lending, and it can make a real difference in the viability and profitability of personal loans. 

Being able to make micro-tailored loan offers based on the depth of data that is now available means that consumers can receive offers that they are far more likely to accept. This also reduces the risks for the lenders as they have a vast pool of data to draw from, including credit scores, utility costs and spending habits. 

When this information is fed in along with marital status, whether they have any dependents and all manner of other data points, it is possible to create a very detailed lifestyle profile. This profile can then be used to extrapolate the most relevant loan products to target the customer individually. It can also be used to compare with similar profiles and look at which products worked for them, as these may also prove relevant. 

AI in Fraud Prevention

In the future of lending, companies are using artificial intelligence in fraud prevention. The machine learning models currently being developed can look at the characteristics of fraudulent cases and pattern match, extrapolating which loan applications may merit more human attention and verification.

These are often patterns that may be missed by humans involved in fraud prevention but can be analysed and picked up on by the lightning-fast computational abilities available to financial institutions through the use of cloud-based computing. The mixture of on-site computers and linked cloud computers, all working in unison, can crunch calculations in real-time and alert human operators to anything that fits the patterns most commonly seen in fraud.

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