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A technology review for online lenders

Online lending becomes a very popular way of getting money in a snap. What are the technologies to support the business, making it smooth, competitive and aligned with customers’ needs?

The whole process of online lending is quick and easy, there’s no need to go anywhere outside your home. Just fill up the form online, then sit and wait for the money to appear on your bank account. It’s so much different from what it used to be: with piles of paper forms, IDs, signatures, stamps, hours or days of waiting for the final decision.

There are many online lenders on the market. They can compete on costs, cuts or rates, but some other factors can be more important both for clients, as well as lenders. So, what makes an online lender successful?

An online lending platform should be easy to use, but offer extra features that help clients evaluate their financial status and borrowing power. Its application process should be simple, yet provide trustworthy information to the lender, allowing quick scoring based on the real customer’s financial and personal data. The platform should also be flexible enough and not limited to loans only—it should provide other sources of incomes for the lender. And guess what? All these options are already available for online lenders to be implemented in their systems.

Help Your Clients Manage Their Budgets

When a client applies for a loan, it means he or she is in some kind of a financial trouble. Apart from the reasons of this situation, it would be a good idea to help the customers to quickly recover, for example, by providing them tools to control their budgets. When they are more aware of their financial situation in real time, they can plan their expenses better and avoid going red.

This is exactly what Personal Finance Managers like Mint.com do: they take care of clients’ budgets, showing them incomes and expenses in easy to understand categories and charts. A user can get an overall glimpse over his or her finances or get more insight into them. Thanks to PFMs, clients can track their expenses more comfortably and set up goals—for example, not to cross the limit of monthly spending on restaurants or entertainment. The customers can also be warned in real time when their goals are in danger or when their finances are supposed to go below zero by the end of the month.

PFMs are not limited to one source of information. With APIs it’s possible to fetch a customer’s data from virtually every financial institution. This makes a PFM a one-stop command center for all client’s assets, providing the whole picture of a financial status.

One API To Verify Them All

API, mentioned above, is another tool, which should be essential in online lending and ensure success in this business. A banking API that can connect to the client’s bank account, such as Kontomatik Banking API is the best solution for obtaining trustworthy information about the customer within seconds: the API can be used both for credit scoring and KYC procedure. After logging into the bank account with client’s credentials, the API retrieves all personal information on the account owner. This data was already verified by the bank, so there is no need to ask the customer for other documents or IDs.

Next, after the lender authenticated the user through a successful log into the online banking system, the API can browse the account history and use the transaction data to calculate credit scoring. No proofs of employment or regular incomes—just the figures taken directly from the place, where only hard facts exist. There is no better source of this kind of information, and with the banking API, the numbers are imported and analyzed in seconds, not hours or even days. The client can be verified thoroughly and given a final decision within a minute. Not only this process is fast, but very comfortable, as the user doesn’t have to fill up lengthy, time-consuming forms.

Go Mobile

The third building block of a successful online lending platform must make use of today’s post-PC era of mobile devices. A mobile app should be something more than just a pocket tool to apply for a loan anytime and anywhere from a smartphone or a tablet. It should enable another sales channel for products and services via push notifications based on a user’s location or activities.

Let’s say a customer is visiting a shopping mall. The app will recognize the place and inform the user about special offers from partners or suggest a small loan with a lower interest rate than on a credit card if a PFM already warns about going red on the credit card account.

Speaking of a PFM, a mobile app is also a great tool for showing PFM information in real time. The user will be more conscious and cautious when spending money, which in result helps in paying back the loan on time without additional costs.

These supporting technologies are crucial for competitive, successful online lending, but they are nothing if the core platform is not good enough. Fortunately, there are complete platforms available, which allow quick and smooth customization and release to the market. Companies such as Cloud Lending Solutions or Mambu offer proven cloud-based solutions targeted to lending businesses. This kind of a platform enhanced with a PFM, a banking API, and a powerful mobile app will offer an ultimate user experience, giving an online lending company a competitive edge.

 

Author:

Konstantin Rabin
Konstantin Rabin

About the author: Konstantin is the head of marketing at Kontomatik. Kontomatik provides a banking API, every financial organizations can now obtain the transnational, account and KYC data. This information can be used to speed the loan application process, provide the customer with the offers that are exactly matching his profile or simple to access the credit rating of the applicant. With Kontomatik, you can not only satisfy the KYC requirements but also understand your client in a new way.

About the author

George Popescu

Serial entrepreneur.

George sold and exited his most successful company, Boston Technologies (BT) group, in 2014. BT was a technology, market maker, high-frequency trading and inter-broker broker-dealer in the FX Spot, precious metals and CFDs space company. George was the Founder and CEO and he boot-strapped from $0 to a $20+ million in revenue without any equity investment. BT has been #1 fastest growing company in Boston in 2011 according to the Boston Business Journal and the only company being in top 10 fastest in 2012-13 as it was #5 in 2012. BT has been on the Inc. 500/5000 list of fastest growing companies in the US for 4 years in a row ( #143, #373, #897 and #1270). After the company sale in July 2014 until February 2015 George was Head-of-Strategy for Currency Mountain ( www.currencymountain.com ), a USD 100 million+ holding company focused on retail and medium institutional currencies, precious metals, stocks, fixed income and commodities businesses.

• Over the last 10 years, George founded 10 companies in online lending, craft beer brewery, exotic sports car rental space, hedge funds, peer-reviewed scientific journal ( Journal of Cellular and Molecular medicine…) and more. George advised 30+ early stage start-ups in different fields. George was also a mentor at MIT’s Venture Mentoring Services and Techstar Fintech in NY.

• Previously George obtained 3 Master's Degrees: a Master's of Science from MIT working on 3D printing, a Master’s in Electrical Engineering and Computer Science from Supelec, France and a Master's in Nanosciences from Paris XI University. Previously he worked as a visiting scientist at MIT in Bio-engineering for 2 years. George had 3 undergrad majors: Maths, Physics and Chemistry. His scientific career led to about 10 publications and patents.

• On the business side, Boston Business Journal has named me in the top 40 under 40 in 2012 in recognition of his business achievements.

• George is originally from Romania and grew up in Paris, France.

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