A few years ago, when people required some form of financing, the only safe option was traditional banking. Fortunately, today there are many alternatives to obtain loans reliably. One of them is, without a doubt, fintech. These financial institutions operate entirely online and provide alternative financing services to those of banks.
If you still do not know how technology finance companies operate, here we list the main differences between banks and fintech companies.
Banks operate in much the same way as they did years ago: the application must be taken to a branch, the stationery is received by an executive, each document is carefully reviewed and, if the loan is approved, the client is notified. All of this can take several days. Instead, with fintech people know in a couple of minutes if their application was pre-approved and when they are already clients they can receive their loan in a few seconds.
Banks’ requirements for making short term loans are usually quite strict. For that same reason, few people can access this type of financing. In contrast, online loans offered by fintech companies have very simple requirements. This allows a greater part of the population to enjoy these services.
Another major difference between banks and fintech has to do with flexibility in terms of contracts. While changing the payment dates with a bank often involves a tedious process of several days, with fintech you have the possibility to restructure your loan from the comfort of your home with a single click.
Similarly, the forms of payment vary between a bank and a technological finance company. On the one hand, banking institutions require that payments be made directly at their branches or by transfer (if that service is available). In contrast, fintech companies offer multiple payment options to simplify procedures for their clients.
Finally, one of the essential requirements to carry out a procedure with a bank is the assistance to a branch to deliver the documentation. This necessarily implies displacement and limits access in the most remote populations. On the other hand, with fintech you don’t have to leave your home to receive loans and you can send your application from wherever you are, as long as you have an internet connection.