When talking about the evolution of financial services, technology is one of its most significant influencing factors. Today, there are several software solutions in place which enable people from different parts of the world to sign up for various financial products and services. The use of mobile connectivity and other technologies has broken the barriers of geographical access to these services. This includes open banking, which provides individuals with a variety of financial tools through the same platform irrespective of their bank or NBFC.
FinTechs have also been instrumental in reducing the time and effort needed to assess loan applications. This is especially true for borrowers with less documentation, credit history or other risk factors. These loans can be easily procured through online processes, which eliminate the need for physical collection and submission of documents. This has also made it possible for lenders to explore new customer segments such as SMEs or students without a credit history.
The growing availability of consumer data has also helped in improving lending processes. The use of trends, which cover directions and tipping points in a borrower’s credit history, as well as alternative data sources such as property records and utility bills, has enabled lenders to see a more holistic view of a person’s creditworthiness. This allows for better assessment of risks, more informed loan decisions and improved lender profitability. Moreover, AI technology is enabling better, faster and more efficient risk assessments for banks and other financial services providers.