4 Trends in Technology That Are Affecting Money Lending

In Partnership with Ascend

The fintech market continues to unveil new solutions and become a serious global economic force. By 2030, the fintech ecosystem is expected to account for nearly $700 billion. This represents a more than six-time increase from fintech’s worth in 2020.

Given its increasing relevance, fintech is affecting all areas of finance including money lending. Traditionally, money lending has been a slow-moving, systematic process that favored the lender. No more. With advances in fintech, borrowers are gaining more advantages. In fact, the lender-lendee relationship is becoming more collaborative and dynamic.

So what are the biggest fintech trends affecting consumer money lending? Below are several prominent changes that are taking place in the lending sector.

Trend 1. Third-party systems are making income verification quicker and safer.

A notorious “speed bump” for borrowers interested in mortgages or auto loans has been the lag time between application and approval. Although the majority of lenders have moved to digital application systems, approvals can still take days. Often, the delay is related to gathering and verifying essential data and documents like income. 

Innovative fintech startups like Truework are addressing these problems. Truework’s system allows for rapid income verification data exchanges between consumers and lenders. Thanks to high-level encryption and other applicant-friendly protections, all interactions are secure as well as accurate. The result is a more appealing and simplified experience for all stakeholders.

Companies that seek to improve longer approval times will no doubt continue to transform the lending approval process. And as consumers become accustomed to a high quality of treatment and response, they’ll demand nothing less. Consequently, this trend is likely to not just continue but accelerate toward nearly real-time lending approvals.

Trend 2. Consumer-facing apps and sites are educating individuals on financial literacy.

There’s an old saying that suggests “money is power.” However, education can be even more powerful, particularly when the education revolves around finance. Historically, schools haven’t taught much financial literacy-related subjects. This has led to potential borrowers being confused by topics like income-to-expense ratios and variable interest rates.

Several apps have arisen to address the lack of financial literacy across the country and help consumers make wiser lending decisions. World of Money, a tool with easily understandable classroom-like modules, consistently earns strong reviews. Though designed more for the high school market, its topics are relevant for all people confused by budgeting, taxes, and other subjects.

Financial Literacy Rocks! is another destination site that focuses on offering financial resources. Though less robust than other providers like the Zogo app, the site contains basic knowledge. When paired with additional fintech solutions, Financial Literacy Rocks! can serve as a foundational source of money management information. That way, more people can make the right lending choices for themselves based on their lifestyle goals.

Trend 3. Peer-to-peer lending fintech is opening doors for more borrowers.

Although peer-to-peer lending has been around for a long time, it hasn’t always seemed accessible. Now, fintech platforms are streamlining the peer-to-peer lending process to make it more feasible for all stakeholders. Not only is this opening investing doors for consumers but it’s helping people with questionable credit get loans.

Peer-to-peer lending works by linking consumer “lenders” with would-be borrowers who may not be able to get traditional loans. To reduce risks associated with lending money, peer-to-peer lending platforms allow consumer lenders to invest in a portion of many loans. If one borrower defaults, the consumer doesn’t lose all the cash that’s been invested.

By using peer-to-peer lending through trusted companies like LendingTree, both borrowers and individual lenders are better protected. Neither party has to reinvent the lending process. Instead, borrowers and lenders can work together anonymously and achieve their financial objectives.

Trend 4. Cryptocurrency has become a viable way to pay off a mortgage.

Cryptocurrencies like Bitcoin haven’t had the best year in 2022. Nevertheless, crypto doesn’t look like it’s going by the wayside anytime soon. With crypto being traded, especially by young people, it’s turning from a hobby to a legitimate currency. And many lenders are taking notice.

The trend toward paying for a home with a digital wallet hasn’t quite taken hold. It’s becoming more of a possibility, though. Throughout the United States and Canada, a few home mortgage lenders are dabbling in digital currencies. They’re setting the stage for what could be tomorrow’s method to pay down loans and make home ownership a reality.

Will cryptocurrencies in lending go mainstream? All signs seem to point in that direction. Take a look at the consumer retail marketplace. Every quarter, more retailers are becoming open to the idea of accepting crypto in exchange for goods and services. Their willingness to add crypto to their variety of payment options shows that crypto has legs. It may be only a matter of time before crypto becomes acceptable for all lending arrangements.

Fintech entrepreneurs are surprising the world and offering alternatives to conventional lending strategies. By 2030, the lending landscape may look quite a bit different than it does today. And that’s not a bad thing for lenders or borrowers.