The expanding gig economy has allowed consumers to explore non-traditional borrowing options. They are looking for better deals in the present financial environment where traditional banks and lenders are facing challenges from the technology savvy fintech companies observed Bahaa Abdul Hussein.
New digital technologies allow businesses to customize their offers quickly based on the demands of their consumers. Fintech companies are using such technologies to give tough competition to the traditional mortgage providers.
The latest RBA Financial Stability document shows how non-banking sector lenders have seen excellent growth in their mortgage products in recent years. Lots of RMBS (Residential Mortgage-Backed Securities) are being issued by the non-banking lenders.
On the other hand, spreads have come down to a level not seen since 2007. This environment opens up new business avenues for the fintech companies. Big banks want to avoid risky loans, leaving the ground open for other lending businesses. Efficient mortgage operators that enter this vacant space do not have stringent capital requirements and do not need high interest margin.
Advanced Tech and Efficient Processing
A major reason for the rapid expansion of fintech companies is their use of advanced and latest technologies. Their efficient processing methods, such as same-day approval places them far ahead of the traditional mortgage brokers. As traditional mortgage lenders try to retain their customers, fintech companies are using attractive offers to gain more customers. They are offering personalized solutions in place of fixed loan options that ask loan applicants to take it or leave it.
Big banks do not want to offer certain types of loans. They do not give loans to certain groups of people. Tech companies are devising innovative loan solutions for these groups. A bridging loan is an excellent example how the new fintech companies offer value to their customers.
The Bridge Loan Example
Bahaa Abdul Hussein given an example to make things easy.
Prices of residential properties have been moving up. The old system of selling a home and using the equity for buying the new home does not work any longer. That is where the bridging loans offered by the fintech companies prove attractive for the customers. Fintech companies have carved out a niche in the lending sector with such unique and customized offers.
The fintech companies have evolved over a decade. Now they are ready to handle tough challenges and connect with the technology savvy customers. Prospective borrowers are checking “buy now pay later” and other borrowing options.
The current global lending environment is ready for a revolution. Many fintech companies are coming to shake up the mortgage sector. They will change the home loan landscape with the help of new technologies and unique home financing options.
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