Is Fintech Changing Lending?

According to a 2016 survey, the vast majority of lenders expect that fintech will be at the heart of changes occurring in the sector over the next two years, calling the level of disruption “unprecedented” and universal. By equalizing opportunities for investment, financing, and lending for businesses of all sizes, fintech is changing lending for the better.

Lower Bar of Entry for Investors

Fintech was first to make it possible for people to invest in large investment trusts with small buy-ins as low as $100 in many cases through crowdfunding and crowdsourcing. Traditionally those types of investment vehicles have been reserved for large institutions and corporate investors. Now people of ordinary income levels can make smart bets on Wall St. to realize lucrative returns.

As the success of these once startups has grown, large brokerages have begun to try to expand their offerings to include small investor vehicles. Backing new online investment and savings vehicles like Acorns and Stash, big named brokerage firms like Scottrade are following fintech’s lead.

Speedier Transactions

One of the biggest breakthroughs in fintech for real estate has been the paperwork and financing processes. Quick and easy fintech tools being created by new tech startups in the real estate sector are making it easier and faster to get approvals, secure financing, and process paperwork.

Individually, online lenders are able to issue approvals to homebuyers in a matter of minutes, even underwriting loans. On the commercial scale, new payment mechanisms that offer cashless payments and real-time money transfers like Square and Zelle are helping to speed up transactions. Our technology helps commercial deals close quickly. Since 2009 we’ve financed hundreds of millions of dollars for massive deals in a matter of days not weeks.

Democratized Access to Financial Advisors

Like large investment pools, financial advisors have been a luxury the average income earner could not afford. Over the last decade there has been a deluge of fintech startups offering the type of financial advice that only high net wealth individuals previously could access. This is leading to smarter investments, better financial planning, and healthier individual savings.

In the same way, there are fintech companies aimed at doing the same for large commercial real estate investors as well – including the globally known Charles Schwab financial advisory firm with its new robo-advisory service. These companies use advanced data analytics and predictive modeling to offer expert advice for very little money.

Non-Traditional Funding for Projects

Financing of big projects took a huge dive following the housing collapse a decade ago. It forced developers to seek out non-traditional lending sources. Fintech filled the gap with dozens of new fintech companies offering non-traditional funding for commercial projects that otherwise could not be secured through traditional lenders.

Even though the real estate market has rebounded, those non-traditional lenders are still competing with big named institutions for the same developers looking for cheaper, faster financing for their projects. This is proving to be a huge benefit in rural communities where attracting lenders for big projects is much harder to come by.

By |2018-08-01T13:07:48+00:00June 21st, 2018|
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