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Fintech’s Impact on the Loan Industry and the Current State of Micro-Loans

Fintech has been taking over the financial market by storm, and it doesn’t look like its progress is going to slow down anytime soon. There are many benefits to be realized in the new range of technologies, and some of them are not immediately obvious, even to people who’ve been involved with the market for a long time.

The loan industry has been particularly noticeably affected by fintech and its advance into finances, and it’s interesting to observe the shifts in certain trends. Micro-loans are a relatively new idea that hasn’t been around for that long but has already managed to make a strong impact on the market as a whole.

How Micro-Loans Work

The general idea of a micro-loan can vary from one area to another, and it’s important to retain an objective overview of the system. Generally speaking, a loan that’s in the range of $100 - $1000 can be classified as a micro-loan according to most definitions. In the UK this range is usually £100-£500. Some lenders and even banks might have their own conditions for what exactly can qualify as a micro-loan. It’s also worth noting that some institutions have started to move away from micro-loans and moving into larger loans with longer term duration. The move is also in an effort to make sure loans are more affordable for customers.

Fintech has been changing that though, and the results can already be seen. Many companies can now take advantage of high-quality lending services at a lower interest rate, allowing them to expand their operations more efficiently, and to move into new markets with ease.

The Options Available to Small Businesses

Which brings us to perhaps the most important point of all. Fintech has had a strong impact on the small business sector, and micro-loans are proving to be a particularly useful tool for people involved in that field. It’s important to understand the full implications of taking out a micro-loan before jumping towards it, of course. Using a company like cashlady can help avoid some pitfalls with micro-loans as they work with trustworthy, FCA authorized lenders and can save you the hassle of searching and comparing lenders which could take a bit of time.

Many companies have historically been forced to go under due to their unfavorable position on the market. This was typically the result of poor lending decisions and lending where customers cannot afford the loan. Nowadays, it’s a different story, and fintech is largely to thank for this development.

More Flexible Borrowing

Borrowing as a whole has become much more flexible for both sides of the equation, and for people from all walks of life. High-quality loans are no longer a luxury exclusively available to people with high credit scores and a solid operational history. Modern businesses can take advantage of good lending factors with much less effort, and the result can already be seen on the market. Many companies have started to report positive developments on a steady basis, and this is largely thanks to the impact of fintech.

Moving Towards the Future

With all that in mind, what does the future hold for borrowers and lenders? It certainly looks like the market is moving in the right direction in terms of stabilizing everyone’s access to these services, but we likely still have a long way to go until we’re at the right stage.

Until then, it’s important for users to adapt to the way the market works and to start taking advantage of recent developments as much as possible. There is a lot to be said about the risk of falling behind the trends when it comes to finances and lending services, and companies and users alike should be aware of these risks and try to avoid them.

Educating oneself on how the market works is not that difficult though, especially with the easy access everyone has to communication technologies and other similar solutions these days. It’s not that hard to go online and find out about the recent developments in the fintech field, and how they relate to their own situation. From then on, keeping up with that knowledge is a relatively easy task that takes a little time on a regular basis.

Users should make sure to filter their sources of information though. There’s a lot of confusion going around right now regarding the way certain aspects of the fintech market work. It’s obvious that not everyone understands the field well enough. Which is fine, but what’s not fine is when those same people start to spread their misinformation to others, presenting it as actual facts. This can be harmful to the financial community as a whole in the long run, and it’s something everyone should be very careful to avoid. As we said above though, there are plenty of opportunities for obtaining the right kind of information these days.

 

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Comments: (1)

Kaiser Naseem
Kaiser Naseem - IFC - Moscow 12 March, 2019, 10:15Be the first to give this comment the thumbs up 0 likes

Absolutely, Amy. Technology has certainly made it much easier for MSMEs to access financial services and products. Digital technology has given a big boost to financial inclusion globally. Nontheless, although an improvement over previous years, 1.7 billion adults still remain financially excluded worldwide. Hence, a lot more still remains to be done.