That iPhone in your back pocket moonlights as a lot of devices. In the morning, it’s your alarm clock. During your workday, it’s your PA and calendar. At night, it’s an entertainment system stocked with the latest games and movies. And now, your smartphone can be a banking device. Fintech companies are linking traditional financial services to a digital platform, creating a new way to perform daily banking tasks straight from your phone. While this is a convenient new feature for anyone looking to bank online, this new function is set to benefit the underserved the most — especially when it comes to finding a loan.
Banks profile potential customers
Despite how necessary a loan may be, banks rarely approve assistance on needs alone. The traditional banking model relies on a complex set of criteria to approve their services. A large part of these regulations reviews an applicant’s financial history to get a sense of their reliability as a borrower. Without a robust financial history, potential borrowers will struggle to secure a loan successfully.
These conditions hurt the credit invisible
Though it’s a reliable way of reviewing applications for the banks, these standards put the credit invisible at a disadvantage. These criteria don’t just weed out irresponsible borrowers; sometimes, they make it harder for reliable borrowers to find help. Having a thin file or no credit doesn’t mean you aren’t responsible with your money. Millions of credit invisible Americans pay rent and other bills on time, yet they’re punished by big banks when they’re looking for help during an emergency.
Fintech offers a different way to bank
Whether they have non-existent financial histories or, like so many Millennials, belong to a new economy that distrusts the traditional banking model, these underserved individuals can still access much-needed assistance. Instead of lining up to see a bank teller, these individuals can sign into a fintech app and receive many of the same services.
When the underserved need cash in a hurry, online payday loans are often the quickest way to pay off bills and repairs. Unlike traditional banks that may take weeks to review an application, companies like MoneyKey process short-term loans on a rapid timeline. In some cases, they can approve a loan in just one business day.
Online services are faster and more convenient
An online payday loan also meets Millennials’ expectations for digital banking. Online lenders move their services out of a brick-and-mortar branch and onto the digital landscape. Borrowers can receive their cash advance online via direct deposit and repay their loan by convenient e-payments, all while managing their account through an accessible app on their phone.
Downloading one of these apps is as simple as downloading something like Animal Crossing. Once on your iPhone, it joins any other financial app in your mobile wallet. Since it’s susceptible to the same security risks as your mobile bank app that facilitates digital payments, it’s important for anyone using these apps—underserved or otherwise—check the appropriate security measures are in place to protect their personal information.
Though they may not be as fun as the games on your phone, fintech apps play an important role in your banking experience. Fintech is filling the gaps created by the traditional banking model, helping the underserved find a way to cover financial emergencies quickly and conveniently.