Online Transactions Series (Part Two)
Posted by Clint Davis | 10 Mar
Online service models: what are the advantages?
There is evidence to conclude that there is an increasing number of lenders focusing their business model in online formats. Even the traditional “brick and mortar businesses” who still offer over-the-counter services are increasingly transitioning their service models to include much of their business requirements online. Of course, there are huge benefits to the consumer for these service models.
I’d like to take this opportunity to describe a situation of how I was personally affected by a prominent lenders manual requirements regarding their loan application process. A few years ago I was applying for a personal loan through my bank (one of the ‘Big Four’), after going through the (at times) tedious process of describing my financial circumstances to the Loan Assessor, I was then asked to provide the documentation necessary to assess my loan application. This included providing the lender with my most two recent PAYG pay-slips. This was unfortunate for me, as these pay slips were only available from my place of employment, as they could only be accessed from the employer’s internal system. I then had to postpone the application, travel to my place of employment (a 15-minute drive) and retrieve my two most recent pay slips. Before I left the bank’s branch, the Loan Assessor failed to advise me that this was not the only information they required to assess my credit worthiness. At the time, I was in receipt of a Centrelink income and upon returning to the branch with my pay-slips, I was then informed by the Loan Assessor that they required a printed copy of a Centrelink Income Statement to assess the entirety of my financial situation. At the time of the loan application, I didn’t have an internet connection at my home, so I was required to travel to my local library and use one of the computers there to retrieve a Centrelink Income Statement. I then had to pay to have this document printed from the library printer. This entire ordeal was rather frustrating for me, travelling to and fro from one destination to another just to satisfy the lender’s requirements, especially because there was a sense of urgency behind the reason I was seeking the personal loan.
I was eventually approved for the loan, however, the entire process had been a large inconvenience to me. Additionally, the loan application took days to be approved, at which point I actually received the funds. I found myself wondering why such a lender, with massive financial and technological resources at its disposal still, employed such manual a process in relation to a consumer attempting obtaining credit? As a student of law, I understood that the lender was obligated to review all matters in relation to my credit worthiness, in order to determine that the proposed credit contract – in this case, my personal loan – was “not unsuitable” for me. Since that time, I have learned that there are now many lenders online that provide loans and their processes are automated almost to the point where applying for, and subsequently obtaining a loan, is one that can be undertaken online. Furthermore, these online vendors offer their services rendered in just a portion of the time it takes traditional lenders to assess a loan application.
I’m of the view (and I’m sure I’m not alone) that there is a certain stigma attached to short-term, small amount loans, colloquially referred to as ‘payday’ loans. A payday loan, under law, is defined as a “small amount credit contract” and is for a term of between 16 days – 1 year and has a maximum value of $2,000. Most commonly, the purpose of these loans is to service a temporary cash short-fall, or a sudden and unforeseen financial cost (damn you, car rego!). The law has strict prohibitions and conditions which providers of these loans must ensure are satisfied before a credit contract is entered into. It’s notable to advise that these loans have been subject to some of the strictest lending criteria of all credit facilities in Australia, especially when compared to personal loans and credit card facilities. Therefore, consumers are protected from unfair contract terms, excessive interest rates or additional fees or charges. This loan type can be one of the most useful credit facilities, and can be a great advantage to particular classes of consumer’s in Australia who would otherwise not have access to a credit facility and would subsequently be excluded from the lending market. One of the primary benefits to consumers through these loans is that virtually the entire application process can be undertaken online.
Incredo Analytics has made this process even easier for consumers. Choosing a lender that subscribes to Incredo Analytics means that when it comes to the stage of the loan application where the lender must verify the consumer’s financial situation this can be done electronically from the comfort of your home, or from anywhere on your compatible mobile or tablet device.
How does this benefit you? It means that you can securely provide all the necessary information and documentation electronically, and often these lenders advertise that you can receive the funds in a short amount of time as opposed to traditional lenders, who often take some days to assess your application. So the next time you seek to obtain a loan, for your own benefit and value, it may be worth asking your lender the question: “Do you use Incredo Analytics to verify my financial situation?” If the answer is no, then it may be worth considering whether the time and effort of a manual loan application are worth it, especially considering there are alternative lenders that have a formidable online presence who offer financial products in a way that is easier and more convenient to obtain.