How Loan Apps Are Disrupting the Traditional Lending Industry?

By Rupeezo | 4th, May, 2023

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The digital revolution of loan apps and instant credit line facilities has disrupted the traditional financial space.

Earlier, applicants have to follow through the traditional process of visiting the bank in order to get funds for their business or any other purposes. But with the digital loan facility, there has been observed a major loan app impact on lending as availing of a loan has become a faster and simpler process.

As a result, more and more people are succumbing to the use of digital lending apps to have their financial needs met.

The introduction of innovative financing solutions by FinTech has reformed the economic and financial territory; online lending institutions, instant loan apps, peer-to-peer lending, and digital payment systems are some examples of the innovating disruptions.

Digital Revolution and Disruption of Traditional Loan Facility

Traditional vs. digital lending facilities have transformed the loan industry. They have made the process of loan approval and fund disbursal smoother. Loan app disruption has resolved customer issues with lending facilities that traditional banks could not.

Digitisation and the availability of credit lines have become the current norm, allowing customers to benefit from the use of unconventional financial products. The loan app’s impact on lending has smeared the line between the traditional financial sector and online financial institutions.

Here’s how loan apps are revolutionizing the traditional lending system.

1. Swift Loan Process: The traditional banking system involves major documentation work along with multiple visits to the bank. With online digital lending apps, the process becomes much faster as there is a quick evaluation mechanism to verify the loan eligibility of the applicant. Just by entering a few informational details in a loan app, one gets to find what loan amount and credit line facility they are eligible for. The entire process can take place using the loan app itself, thus saving a lot of time and effort for the customers.

2. Accessibility to Instant Funds: If you stick to the traditional lending process, then the chances of getting instant funds are almost negligible. But with traditional vs. digital lending, there are high chances of easy accessibility in the case of loan apps, even to a larger borrowing amount. Loan apps provide for a quick loan approval process, which means the funds are also quickly disbursed into your account within a day or so. Such facilities can be utilized when you are faced with a financial emergency. On the other hand, you cannot rely on a traditional loan facility to provide you with instant funds in case of emergencies.

3. More User-Friendly: Most loan apps are user-friendly ensuring that the customers find it easy to use the loan application. For applying for a loan through traditional modes, one requires assistance as the process is complex for the most part. But if you are dealing with a legitimate lender having advanced digital lending apps, then applying for and getting approved for a loan becomes a convenient process. This way the applicant does not have to take out the time to visit the branch and invest a lot of their time. The customer just needs to open the respective loan app on their smartphone and get started with their loan application process.

4. Better Repayment Solutions: Another reason why digital lending apps have become a preferred lending option these days is the flexible repayment terms it offers. Some online lending facilities even offer zero cost for foreclosing the loan in case of some specific business loans. This is why small and large businesses are taking the aid of loan apps instead of traditional banks to have their business needs financed. The borrower also gets to choose the repayment tenure in which he can comfortably pay off the loan. However, the repayment terms affect the interest rates and other related charges, but the repayment flexibility makes digital lending a better option as compared to traditional banks.

5. Considerable Interest Rates: If you come across a credible loan app, then you are going to enjoy the low-interest rates and waiving off some other charges. In the case of traditional vs. digital lending, online financial institutions provide lower interest when contrasted with traditional facilities. However, to avail of such benefits you have to come in contact with the right digital lending facility, as there is no scarcity of scammers out there. With the traditional lending system, the interest and other charges are comparatively higher since they have to cover the cost of running such a traditional setup. But with loan app disruption, there is no such excess cost, which is one of the reasons why they have relatively low charges or fees for their different financial products.  

6.  Better Customer Retention: The loan apps use the most advanced technologies and creative ways to keep the attention of their customers. With their user-friendly interface, digital lending apps assure a better customer experience so that the customers would want to take more loans from them in future. With various discounted offers, vouchers, and gamification of apps, it becomes easier to attract customers and increase retention rates.

While in the traditional financial system, no such innovative efforts are made by the traditional lenders as they stick to a straightforward process of lending. With the digital revolution and the loan app’s impact on lending, online advertising has become more crucial than ever, and FinTech is making more efforts to make the best use of the digital landscape.  

7. Variety of Financial Products: Loan apps and online lenders keep on working their way to come up with loan apps that could ease the borrowing experience of their customers. Be it the credit line facility, personal loans, travel loans, education loans, or small business loans, they keep on specifying their financial products to meet the varied loan requirements of their customers. With such a tailored loan facility and the Loan app disruption, the applicant finds it easier and hassle-free to apply for the loan with the digital lending apps instead of approaching the traditional bank and explaining their specific loan requirements to them.

To stay relevant in the current financial market, one has to keep up with the evolving customer needs and make alterations to fulfil the changing financial requirements of the customer.

If you want to explore the Quick Loan Apps or connect with credible lending institutions, consult with Rupeezo. We help our customers experience the best loan products to meet their evolving financial needs.