Uberization in lending: what bonus will the market get
The idea of optimizing processes by excluding middlemen, commonly called “uberization”, had its impact on virtually all branches of human activity. And although the principle is one, for each industry, it plays its role and solves its problems.
Our SHIFT.cash platform is an example of uberization in the financial sector. We specialize in loans secured by vehicles, and all processes on the platform are automated. Therefore, the investor and the borrower do not need to interact with the financial institution, and all the necessary steps are performed online.
Globally, credit uberization addresses the following challenges.
All projects working at the borders of finance and IT are united by a sphere called fintech. These projects are an alternative to banks and classical microfinance organizations. The first are extremely inflexible and bureaucratic, so bank credit is not available to everyone, and if available, the process of obtaining it is very tiring. The latter give loans easily and quickly, as a result of which investors’ money is exposed to high risks, and loans are issued with incredible interest.
Fintech-projects, as a rule, offer the product that is optimal from the point of view of availability and cheapness. That is, the interest rate here is higher than in the bank, but much lower than that of microfinance organisations. At the same time, loans are issued almost instantaneously, and investors’ money is well protected. The system for protecting the interests of investors for each project is different. For example, on our platform, the risks of investors are protected immediately on several levels. First, we are working with the lowest-risk lending — secured lending, that is, the likelihood that the loan will be repaid, is initially much higher. Secondly, the loan is issued for a maximum of 35% of the value of the collateral (car), which guarantees a return of funds to the investor with interest. Thirdly, the platform will work on the blockchain technology, so all information about loans is transparent and available to the investor online at any time through the application.
The second point that the fintech projects solve is the speed of obtaining a loan, because one of the main claims to banks is a long period of consideration of the application. Since in fintech-projects all processes are made automatic, the consideration of the loan is formed almost instantly. Moreover, the borrower does not even need to leave the house — the money will automatically go to his account.
Assessing the impact of uberization on the financial industry globally, it can be stated that it increased the availability of financial services. More than 2 billion people in the world do not have access to banking services. At the same time, half of them have a mobile phone, which means they can easily take advantage of credit offers from fintech projects. Especially now, when there are more and more cross-border projects (such as ours), where investors and borrowers can be residents of different countries.
