Financial Technology aka Fintech has used everything from AI to machine learning to enhance its customers' experience and Big Data has played a significant role in gathering data from the clients and markets. One of the regions in which big data is demonstrating most progressive is in lending.
Fintech has revolutionized the finance sector and has contributed to making banking and financial services more cost-effective, efficient and secure. Below mentioned are three ways that fintech companies are using big data to bring the loan business into effect.
1. Re-evaluating Credit: Loans were always granted by past repayment history and financial ability to repay. However, big data allows organizations to go beyond these traditional measures of credibility. Companies can now refer social media, spending records and can also take data from mobile phone applications. Modern lenders are moving towards a more advanced methodology of lending loans. These sophisticated algorithms can identify behavioral patterns that indicate a high chance of repayment, even if a borrower's credit isn't particularly good.
2. Loan Process Faster: Apart from creating new ways to evaluate borrowers, fintech companies are using big data to speed up the loan procedure. Initially, borrowers had to wait for a week or more to receive their credit decisions, but now loans can be approved within a day or even in a few seconds.
3. Enhancing Internal Accountability: An organization cannot be solely customer-oriented. Moneylenders are likewise utilizing the technology to perform internal audits of their records and guarantee compliance will enforce relevant laws and regulations. In spite it isn't explicitly seen by the client, this application does, at last, have real advantages to borrowers. By guaranteeing compliance with big data, fintech organizations can eliminate both the expense of agreement and the danger of liability and fines. The savings would then be able to be passed on to the client, making the cost of financing somewhat less expensive. This demonstrates that big data is an unimaginably versatile tool when utilized appropriately.
These are just a couple of the utilization that big data, in conjunction with advances like machine learning, has been placed in fintech. As these innovations become more widespread, startups and large banks will probably keep on implementing big data to enhance their general lending tasks.