The first use of technology to improve lending was recorded in 1985, as banks started experiencing the difficulty of processing loan applications due to their massive volumes. The paperwork, managing handling loans, and increasing demand for loans became a problem for banks, as they had neither the manpower nor capacity to process so many loan applications.
Fortunately, with the help of computers, automation started, which helps all the banks a lot. In the late ’90s, online banking became a thing, and during the mid ‘20s, alternative online lenders started to emerge and expand the borrower’s options in lending.
Fast forward to today, there are hundreds if not thousands of lenders available online from different countries offering a wide range of loan deals to attract borrowers. During the pandemic, borrowers who opt for online lending have doubled, and online lending demand increased. But the question is, will this trend continue after the pandemic? Or will it fade as our lives return to normal?
The Market Is Growing
With the current momentum of the industry’s growth, it is safe to say that the online lending industry will be here to stay. It is the future of lending as traditional lending companies are now starting to create and establish their online presence to give their existing customers the option of online loans plus attracting new borrowers.
In the future, you should expect a lot of competition in online lending as the industry grows. With many competitors, most online lenders will be forced to lower their loan rates to attract borrowers into taking a loan with their company.
Although this may sound very attractive, this will also hurt the industry. If lenders continue to lower their interest rates due to the competition, it will devour the lender’s profit margins, leaving them with inadequate capital cushions.
However, those in favor of competition in the lending industry believe that any negative effect of the competition can be addressed with proper supervision and regulation.
So shortly, even after the pandemic and things will go back to a pre-pandemic state, online lending will stay and will expand. This will be the future of the lending industry, the digital lenders.
Marketplace Lending
Another thing that we will see in the future of the lending industry is marketplace lending. Those who are not familiar with marketplace lending are financial institutions that match borrowers with lenders. They are acting as the bridge between a borrower and a financial institution.
This is a new lending platform that is slowly becoming popular. The marketplace lenders use technology to connect individuals or businesses that seek financial assistance to potential lenders or investors willing to lend them money or invest in their business.
Marketplace lending offers borrowers lots of benefits. One of the benefits most borrowers love about marketplace lending is the immediate process with a few documents needed and a wide range of loan interest options. As a borrower, you can enjoy fast lending decisions when you opt for marketplace lending. They are using technology and algorithms to calculate a person’s capability to pay, which speeds up the lending process.
Cryptocurrency
One thing we should look out for in the online lending industry is cryptocurrency. Although there are still no lenders who are willing to be paid with cryptocurrency yet the possibility that they will in the future is high.
As of today, there are no available cryptocurrency payment processors that automatically process a payment using cryptocurrency. But with the advancement of our technology, sooner or later, this payment option will be made available for the lenders’ borrowers.
Today, so many companies are already accepting cryptocurrency as a payment option, which is why more people are hopeful that lenders will consider cryptocurrencies as payment for loans in the near future.
As a matter of fact, there is already an existing relationship between loan and cryptocurrency where you can apply for a loan backed by your cryptocurrency as collateral. This loan is called a crypto loan.
The lender will let you borrow 50% of your cryptocurrency value. You will never have to sell your crypto assets just to acquire extra cash on hand. Instead, offer it as collateral to a loan that will provide you the physical currency you need.
Crypto lending will hopefully open many doors in the online lending industry’s future. It would be a great addition to the superb benefits online lending offers the public.
Online lending is now a trend worldwide. From lending websites to mobile lending apps, they made borrowing money an easy task for the consumer. With a few clicks of a hand, you can instantly acquire extra cash by using your computer or smartphone.
Final Thoughts
The future of online lending is now. What we are seeing and experiencing today is what will be in the future, and we are lucky to have lived in this era where technology makes our lives better and easier. Anyone can easily compare rates, apply and track their loan application online. What we will see in the future will only be grown and more options available for borrowers.
