Prevalent And Developing Technologies Has Changed Internal Operations Of Money Lending
When it comes to the internal operation of money lending, it has changed significantly as the banks, financial institutions as well as the alternate sources has embraced the new digital banking trend. Blending the developing technologies with their prevailing machinery has bettered their service quality and expedited the process of loan approval and disbursal.
- Due to the related changes in the internal operations of the banks and financial institutions, it has also indirectly affected the external interactions as well.
- This has in turn helped them to provide greater and better customer services and experiences more professionally and efficiently.
It is all due to the change in business policies of the traditional banks and financial institutions which is now more liberal so much so that implementation of several useful and effective technologies is observed.
The inherent risks
Just as all coins have two faces, such benefits of implementation of technology in the money lending scene do not come without any risks attached. These newer technologies have made the banks and financial institutions increasingly vulnerable to several risks such as:
- Card skimming
- Using more SMSs that has the risks of its own
- Spyware, malware and adware
- Identity theft
- Loan loss
- Website cloning
- Social engineering
- Cyber stalking
- Money laundering
- Viruses and Trojans
- Cybercrime and
- Black money.
The fraudsters even target the more recent innovative financial services such as mobile wallets as well. Similarly, there are more and more money management apps and tools that are becoming more and more vulnerable to cyber related frauds and threats.
As a result, banks and NBFCs, online money lenders such as https://libertylending.com and others are now increasingly cautious in using the new tools and technologies just to ensure that money lending is safe and as productive as they want it to be.
The current scenario
Considering the current money lending scenario which is much more online than offline, the government has also put in their effort to make this digital lending platform much more efficient and safer. They have designed and enforced several regulations and laws to govern the financial services sector in the country and this is the practice now followed by the governments of all countries all over the globe.
The money lending market is continuously evolving and more and more tools are being developed to make this platform more effective. However, considering the fact that risks cannot be avoided in this service sector, it is essential for the financial institutions, the emergent organizations in particular to make sure that they abide by and keep up with the ever changing laws in this sector.
- This will enable them to order to mitigate the risks involved in money lending and at the same time help them to stay ahead.
- They will be able to create smaller and more achievable goals for their business and take short term footsteps to follow a more strategic plan to reach to their predetermined goals.
Such calculative and strategic approach will enable them to acclimate to all these regulatory alterations that are made by the government from time to time. This will in turn help them to elude any long term consequences that may impact their business negatively thereby jeopardizing the future of the financial institution.
Augmenting the process
Implementing newer technologies with the prevailing techs, the financial institutions are now finding is very easy to augment their lending processes and be more productive by making the necessary changes in their business policies.
- This has in turn helped them to have a better control over their funds, its management as well as in making better loaning ensuring more profits and better results.
- They have also found it very easy to minimize the chances of any frauds by designing better fraud risk management frameworks.
These fraud risk management frameworks used by the money lenders have also reduced the time taken by them to detect such frauds prior to making a loan and ensuring precise results.
However, investing in different fraud control initiatives is considered to be more challenging and an important decision to take by the money lenders because it may continue to compete with all other initiatives of the business. Therefore, it is required by the financial institutions to make such investments considering the cost–benefit factor more judiciously and essentially.
It is for this reason you will see that most of the financial institutions of today are employing their fraud control and reporting frameworks.
- This helps them to generate more data and information so that they can recognize the level of fraud in the best possible way.
- With such precise data and findings, they will be able to prevent the actual losses incurred while loaning because they will have all risk areas identified and covered.
In fact, this methodology and technology has enabled the banks and financial institutions to measure the risks and frauds more accurately. In short the automated tools and skilled resources have provided them with the opportunity to gain more from their business.
Role of the regulators
In this transformed environment of money lending all over the world, the role of investigative agencies and regulators cannot be overlooked. They are gearing up with better and more automated tools to keep up with this transformed environment.
The central investigative agency of the government is now developing more proven Bank Case Information System or BCIS in order to control frauds in banking. The central reserve bank has also designed a new and better framework to check frauds in loans.
- These frameworks and systems will provide the banks and financial institutions with early warning indications.
- These tools will also red flag the accounts in which the defaulters will have no access to banking finance any further.
There is also a Central Fraud Registry set up that is usually accessible by all banks which will especially reduce the cost of monitoring the accounts.
The most primary intention of using these unconventional fraud detection and prevention systems at the industry level is to mitigate the chances of any frauds right at the processing stage rather than after the payment is made and default occurs.