The Evolution of Lending
The practice of borrowing and lending money seems to be as old as the invention of money. A quick dig into the history of lending shows that borrowers, lenders, and stringent lending rules existed as early as the Mesopotamian civilization, pre-dating Ancient Greece and Ancient Rome.
It’s fun to imagine why people of early civilizations might have needed loans. Did they need to buy more grain at the market? Or purchase more livestock? Perhaps an artist needed to raise money to build an art studio?
Perhaps the needs of early civilizations really weren’t so different from ours, and so this practice of borrowing and lending has survived into the modern day.
Lending and the Advent of Technology
The face and feasibility of lending were quite different before big technology entered our lives around the 1980s. Therefore, we prefer dividing the space into two broad eras: Pre-Technology Lending and Post-Technology Lending.
The advent of technology and its widespread acceptance at growing intersections of our lives have been prevalent in the lending sphere as well.
While the lending industry has been regulated for a long time now, the ubiquity of credit cards and computerization began with the economic catapult of 1950s America. At this point, we’re all familiar with the story of Frank McNamara who paid his dinner bill with a cardboard card, paving the way for the inception of the Diners Club Card.
This ostensibly minor change in the way we conducted our transactions gave way to a whole slew of institutionalized changes, for instance, online banking, online loan services, and organizations using personal data in making informed credit decisions.
Lending and Sophisticated Technology
Saving the best for last has its merits. Because the development, growth, and widespread adoption of sophisticated technology are what makes the modern-day lending sphere the most exciting time yet!
As the 90s and the 00s came into the picture, we witnessed monumental changes in cloud-based services, behavioural analytics etc
All of a sudden, we saw organizations looking past the expected behaviour from customers and delve into the factors that influence purchasing behaviour. The consequences, here, were a stronger focus on process refinement and a marked effort to break out of silos.
A key, defining feature of this time was the use of analytics for credit risk mitigation.
Lending in the Digital Age: What’s Happening and What’s Next?
In the digital age, the defining values seem to be accessibility, ease of use, and a closer look at the underdog.
Since the first generation of touchscreen smartphones was released, customers have come to expect banking and lending services at their fingertips. This expectation holds true even for the growing Indian economy where the Tier 2 and Tier 3 population has greater access to mobile phones, mobile internet, and growing levels of education.
New age lending organizations, like Aye Finance, are working hard to meet the expectations of these consumers and assist them with making impactful contributions to the Indian economy.
For example, our entire lending process makes it easier for micro and small business owners to gain access to affordable financing options, despite lack of business documentation, no income proofs and no or less past credit history.
We’ve helped thousands of entrepreneurs scale up their businesses and create employment channels by not only providing them finance but also other value added services like helping them in book keeping and other advisory.
What’s next for lending evolution, then? A really exciting time that brings together human intel, data and analytics to score predictive behaviour and mitigate risk. And a truly human touch to tie the whole circle closer together.