Power Of Fintech Harnessing & Improving The Credit Underwriting Process

1. How FinTechs Are Harnessing & Changing The Underwriting Process Typically, banks and NFBCs extend credit to people based on their credit ratings. To examine the creditworthiness of borrowers, they rely on different KPIs like credit history, financial debt levels, income, transaction history, and debt-to-credit ratio to determine the borrower's capability to pay back the business loan. But, still, the system is not sufficient for effective and smooth business lending. Problems within the Traditional Financing Program Due to the manual task of underwriting assessing the creditworthiness, banks and credit unions take huge time to make their credit decisions to the potential customers. Commonly, applications are denied due to lacking sufficient data with the credit bureau to assess their creditworthiness. many potential borrowers' loan

2. Unfortunately, it's a bad cycle, if you don't get a loan which means you are unable to improve your credit score as you don't get the opportunity to repay a loan. So, how can business owners who are new to credit deal with this issue? Accept FinTech Technology. The FinTech Technique New-age FinTech companies have been seen in the last decade which changed its dynamics forever in the lending landscape. The companies which are well equipped with advanced technologies to evaluate the credit risk are delivering customized lending solutions, faster and better customer satisfaction to business owners. FinTechs are harnessing business data as well as automating the underwriting loan process for higher quality by addressing the loan needs of underserved people, but who have creditworthiness. So what do FinTech companies perform differently? Today, FinTech organizations have entirely moved to the cloud where they have more data available on the potential customers to them than previously they were having. With aggregating a large amount of data into ML algorithms, Fintechs can make faster loan decisioning and analyze the loan repayment potential of their customers. The new-age lenders and credit unions can aggregate the potential transactional data from diverse data sources in as little as hours and easily. These lenders are getting a better & reliable view of financial positions and creditworthiness faster. As a result, deserving and potential borrowers get hassle-free and faster access to liquidity. So, how do FinTech organizations manage it? Simple, harnessing the power of innovative financial technologies like:

3. ● Alternative credit scoring The alternative credit scoring concept is different from the traditional measurable factors set by credit bureaus. It's a broad system of credit scoring which is truly helpful to business customers, mainly to those who are new to credit. Why? Because traditional lenders have no reliable data to determine the creditworthiness of their customers, they simply disclaim the loan applications. Whereas in this new-age, an alternate credit scoring algorithm is used by FinTechs to determine creditworthiness by assessing digital records of potential consumers. Such data in the form of "digital footprints" is aggregated from various service communication, insurance, and the investment industry. sectors which include electricity,

4. ● Interpersonal Media FinTech companies are developing their credit scoring system using the algorithm and AI technology. Mapping digital footprints on social media give a clearer picture of clients' business which gives enough data to assess the customer's creditworthiness to repay the credit.. The FinTech sector has created quite an excitement in the lending space and their impact on the underwriting process can't be ignored today. As they continue to progress in its domain, they will be positively helping borrowers’ access to faster credit and become a popular lending solution for years to come. Original Source:- https://financingconsultants.wordpress.com/2021/09/20/how-fintechs-are -harnessing-changing-the-underwriting-process/