Most people think that same-day loans, particularly payday loans, are just a recent invention. But did you know that it’s been around since the 5th century in ancient Greece? What’s surprising is that the Greeks can process it even if they’re far apart without the help of the internet. They do that by passing the money to multiple people until it reaches the borrower.
Today, lenders and borrowers can do same-day loans without the need to pass around actual money. Thanks to the internet and recent innovations in financial tech, borrowers can get their much-needed loan in a day—no, even within the same hour.
The way same-day loans have evolved is genuinely fascinating, particularly on how lenders nowadays streamline their services. To paint a clearer picture, here are four ways dame day loans are evolving:
- Usage of digital lending platforms (DLP)
Online loans and lending aren’t new; it’s been around since the 1980s. While it’s not as robust and widespread before, its pioneers led the way to make the loaning processes quicker and efficient. After all, before a lender can give out money, they need to work on an enormous amount of paperwork—the borrower being located in a remote area only adds to the difficulty. Online lending has proven to be an excellent solution.
Fast-forward to today, most banks and lenders use DLPs. These platforms make it faster for financial institutions to streamline their lending services and accept multiple requests for loans. Aside from that, DLPs also allow lenders to reduce the costs of sieving and processing applications.
In addition, DLPs enjoy the capability of being updated quickly. If there are new regulations and legal changes, lenders can easily update their DLPs to take those changes into considerations.
- Application of automation
Lenders now use data-driven workflows to improve their services. Instead of letting employees deal with mundane tasks of verifying, scrutinizing, and approving loan requests, they use programs and apps to do all of those processes.
Also, most financial innovations developed for the past few years allow artificial intelligence (AI) to be integrated into the processes of financial and lending institutions. Most of them started with machine learning to predict loan eligibility. Now, they use AIs to identify any problem that occurred in the requests and even send notifications to affected borrowers.
Thanks to data-driven workflows and AIs, lenders can now utilize automation. With automation, they can partly take their hands off with the requests they receive. This results in the reduction of the number of employees they need and potential errors caused by humans.
You should know that the cat’s out the bag for a long time: every business requires automation and can immensely benefit from it. According to a set of interviews, most companies in the financial sector experienced around 70% reduction in business operations cost. (2)
On the other hand, automation can allow borrowers to experience faster approvals and receive request rejections with acceptable and logical reasons, improving customer experience and leading to repeat business.
- Focus on customer service
The usage of streamlined digital lending platforms allows lenders to free some of their employees from manual labor and tedious tasks because borrowers can perform self-service.
In addition, most DLPs have additional features and functionalities that lenders can use to make it easy to engage and communicate with their clients. As a result, they can reallocate freed-up employees to customer service. Also, with the help of the DLP, lenders can improve their customer satisfaction and retention KPIs (Key Performance Indicators).
Moreover, DLPs also improve a lender’s communications with third parties. Note that most loans, even same-day loans, require lenders to communicate with other companies and organizations to process the loan requests they receive. With DLPs, they can easily do that promptly. This connection further reduces delays and miscommunications in the process.
- Utilization of rich data, robust analytics, and detailed reports
As mentioned before, lenders now enjoy the power of data-driven workflows. Aside from improving how they can process loan requests, these workflows and collected data provide stakeholders with detailed reports and analytics. With those in hand, executives can make better business decisions to ensure that the company will stay afloat and profitable.
Aside from that, a business can reap the following benefits if they also integrate data and analytics in their financial reports:
- Improved income, expense, and debt management
- Identification of change and trends
- Real-time tracking and monitoring of finances
- Assurance of compliance and progress
- Quicker response on handling liabilities
(3)
Conclusion
From passing money to multiple people to letting an AI deal with loan requests, same-day loans have come a long way. Whether you’re a lender or a borrower, you can benefit from all these changes and evolution.
References
- “A Brief History Of Loans: Business Lending Through The Ages,” Source: https://www.become.co/blog/a-brief-history-of-loans-business-lending-through-the-ages/
- “The Future Of Automation In Finance,” Source: https://research.aimultiple.com/finance-automation/
- “The Importance Of Financial Reporting And Analysis: Your Essential Guide,” Source: https://www.datapine.com/blog/financial-reporting-and-analysis/
Source: Plato Data Intelligence
