The unstoppable advance of technology has greatly impacted the financial sector, which has (finally) started to improve the services offered to its customers.
According to the 2016 Global Consumer Banking Survey of EY, 60% of consumers value a bank with a physical presence, and 66% value one with a digital presence.
However, advancements in technology haven't been the same in all areas of the financial services industry. Today, you can get credit in minutes; however, opening a checking account can take several days, depending on the banking institution; an abysmal time difference considering that loans pose a much greater risk for an entity than the opening of an account.
Automated systems, the secret of speed
The financial sector has moved at two speeds. While the new Fintech companies, daughters of the digital age, have managed to respond to the new needs of consumers, traditional banking seems to have always been one step behind.
Many Fintech companies specialize in the granting of finance. Mostly focused on micro loans, they use algorithms that automate the process of granting credit, much faster than traditional procedures. A "credit scoring method that simplifies and shortens the processes of the evaluation and approval of applications is the common thread underlying many Fintech companies like Lending Tree and Kabbage.
When a customer fills in his data, an automated algorithm analyzes more than 20,000 factors to determine the customer's creditworthiness as quickly as possible. This automated process is faster than any manual process.
Financing in minutes
These automated methods used by Fintech companies allow you to obtain financing in a matter of minutes, and respond almost immediately to your request, while traditional banking processes, such as securing loans for mortgages or personal loans, could take weeks.
Now, again to be fair, Fintech companies that show a surprisingly high speed usually grant loans of a lower amount than those customarily granted by banks. Therefore, the implications of the Fintech credit scoring systems are not the same as companies who loan large sums of money.
Today it is possible to apply for a personal loan from the comfort of your home, without paperwork and with hardly any effort and the money can be in your account in a few minutes.
Although several Fintech companies have recently sprung up to better address the needs of customers, traditional banking institutions have begun responding. For example, several institutions allow you to deposit checks by merely taking a picture of it. Or if a customer loses their credit card, TD Bank allows customers to replace it the same day. There is still a long way to go, but banks are finally realizing that digitization is the only solution that they have to survive in the future.
George writes for finance sites Sobredinero.com and MyFinancialWisdom.com. He holds an MBA, is a digital media professional, and loves writing about both to whomever will listen! He can be reached at firstname.lastname@example.org or @sobredinero1