When you think of borrowing money, what do you see in your mind? Do you picture an intimidating meeting at the bank, asking a suited and booted professional if you can have a loan? Or do you envisage a casual chat with your mate, agreeing upon a wad of cash and an informal time frame for repaying what they’ve lent you?
Perhaps you visualise something else altogether: an electronic exchange with no awkward chats, no red faces, no embarrassment and no admitting that you’ve fallen on tough times, amounts and repayment agreed from behind the security of your own smartphone or laptop screen. But, it wasn’t always this easy…
In the middle of the 20th century, there was no such thing as a credit. Borrowing money wasn’t something most people did, except when they needed a loan to purchase a home. Household goods such as refrigerators, televisions and cars had to be saved for: meaning that many people went without until they could cough up the full amount of cash. But thankfully, things have now changed. Since the advent of credit cards, people have been able to get access to money to buy must-have possessions, overdrafts are common place, and business loans, personal loans and home improvement loans are available through banks, building societies and payday lenders. So how has technology been making the way we borrow money better?
Change no#1: data
Data gathered by smart technology (and even smarter programmers) is affording borrowers better loans. By analysing over 70,000 variables, lenders can calculate a finely tuned risk profile for every borrower, which means careful creditors can exceed the limitations of traditional credit scoring. The upshot of this is that creditors can make an informed decision about whether or not to lend to someone, and those of us who are otherwise excluded and ‘underbanked’ can get access to the money we need.
Change no#2: dignity and design
If you’ve ever had to shuffle into a shop where you’re separated from a lender by a piece of safety glass, you’ll agree that borrowing money didn’t used to feel like a very honourable or transparent process before technology. Nowadays, however, loans can be agreed via smartphones and computers. Fast-loading, mobile-friendly and informative websites are replacing a previously ‘shameful’ experience and turning it into something mainstream, friendly and understandable, just like Car Cash Point do with their website, for example.
Change no#3: convenience
Similarly, the fact we can now enquire about borrowing money, set our own amounts and decide upon our own repayment periods means that technology is enabling the process to be more convenient than it was in the past. In this way, technology is enabling us to borrow money more easily and gather quotes and information from many sources. We don’t have to agree to a lender’s policy if we don’t like it, and the terms and conditions attached to borrowing are easier to find and understand than they used to be.