How does the lending industry progress?


February 2, 2016
How does the lending industry progress?

Lending is an activity that has been around for centuries as there always were people in need for extra funds and people with an excessive capital. Once the banks appeared, lending became one of their core products. Nowadays lending is transforming quite rapidly, there are online peer-to-peer lenders, payday loans and more. Let’s take a look at the history of consumer lending and its future.

Loans. We would want to live without them, but sometimes they are unavoidable. What we can avoid though, is our time and effort spent on getting them. How? By choosing the best and the most effective way of applying for loans.

Basically, there are four methods for getting money when you are running short – apart from earning or stealing: you can use your existing credit card or allowed debit (overdraft) on your bank account, sell some of your properties or apply for a loan. If you aren’t able to do the first two, and you don’t want to get rid of anything, then you need someone to lend you money. And here comes the moment when you should choose wisely. But no, it’s not the obvious advice of finding a right lender with the best terms and rates. It’s about something that drives the whole process: your time and effort.


The old-fashioned approach (offline)

You must go to a brick-and-mortar office within opening hours. Be there on time, otherwise, you will waste your time. Prepare for queues – and for wasting your time again. Bring all your IDs and papers with you, everything that is required by the lender: income statements, tax returns, account history from your bank, and so on. If you forget something, same old story: you will waste your time.

When you apply for a loan in your own bank, things get much easier and smoother. You are no stranger to the lender, you got your history and the authentication is simple. Still, you need to do some paperwork and spend some time at the bank’s branch office.


The modern approach (online)

The best, most comfy place you can have – at your home. Or wherever you are, but feel the need of doing it. No time constraints, no rush, no commute or traffic jams. It’s just you and your online device. You can apply for a loan anytime, anywhere. Still, you have to authenticate yourself and provide the lender with your financial data. And, again, it’s a lot simpler when you do it with your bank or other financial institution, which already knows you: you use your login credentials, fill the online form and approve the operation of some kind of authorization code.

The process gets more complicated, if you have to provide any additional documents. Scanning or taking pictures of them is neither comfortable, nor quick.

Now imagine applying for a loan online in an institution, where you are a completely new customer: how to authenticate yourself in the first place? In most cases, by sending pictures of your IDs. Then you are requested to scan/capture many papers proving your credibility. Last but not least, you have to enter lots of information manually, starting with your personal data present on the IDs you already scanned. So it’s like a visiting a virtual branch office with no staff inside: you spare your time on travel, but the entire work needs to be done personally. What’s worse, you have no guarantee you did it right or whether the lender will be satisfied with the documents you provided.

The futuristic approach (but the future is now)

Luckily, there is a third option, which combines the comfort of an online application with the speed of automated data mining. The chore of collecting all necessary information is on the lender’s side – with just a little help from you.

If you choose a credit institution, which uses a bank API in its online application system, the only data you will have to enter would be your login credentials to your online bank account. Of course, it’s an absolutely secure and safe process, where none of this sensitive information is stored anywhere or reused in the future. You simply login to your bank account and let the API do the rest. Within seconds, you will be authenticated: your relevant personal details along with your ID numbers will be retrieved, and then the information from your account history will be extracted, allowing the lender to calculate your financial credibility.

Such solutions for fast online authentication and verification already exist, and Kontomatik is one of them. It simply gathers the customer personal information from a trusted source – the client’s bank. So why repeat the same KYC procedures over and over again, when Kontomatik technology can make use of the existing verified data?