How Fintech Is Transforming the Loan Industry in Finland

As one of the leading countries in the field, Finland has experienced incredible growth in fintech, especially digital lending. Businesses and clients can get sizable loans in a matter of a few hours, much faster than with traditional financial institutions. They are the perfect option for anyone needing a quick loan, whether for emergency or cash flow reasons.

Many digital lenders also offer them without any collateral or guarantors. This makes them much safer than regular loans and protects borrowers from bad situations. The platforms also offer comparisons, helping you quickly discover the best loan option for your needs.

Why More Borrowers Are Choosing Online Loans

With such a meteoric rise of fintech, many clients are turning to digital, online loans instead of regular ones from a bank. There are many reasons for this happening. One of the main ones is certainly the accessibility of these loans.

People can get loans approved much faster and thus can cover emergency spending such as hospital bills or needed repairs. The application process is also much simpler. You don’t need extensive paperwork like with banks, and you can submit your application in just a couple of clicks. This allows you to get a loan from the comfort of your own home, without having to even step into a bank.

There are also much less requirements for online loans, meaning that even people with lower credit scores can get them. This opens the door to loans to a wider demographic, some of whom wouldn’t be able to get them from traditional financial institutions.

These are only some of the reasons digital loans are becoming more popular. With our society's ongoing digitalization, online loans will only become more popular and will eventually replace regular loans.

Short-Term vs. Long-Term Loans: Key Considerations

Based on your need for a loan, you’ll have a choice between two types, short-term and long-term loans. Both accomplish the same thing, providing you with the needed capital, but are different based on the amount of money you need and the period you plan on paying back the loan.

Short-term loans are usually taken for more urgent needs, such as sudden medical bills or car repairs. Their payback term is usually a year, or even less, a couple of months. Because of this, they carry higher interest rates than longer-term ones.

Long-term loans have longer repayment periods, between 5 and 30 years. As mentioned, they have lower interest rates and are often better structured than shorter loans. Their main use cases are large investments, such as taking a mortgage on a new home or needing capital for a big renovation project.

How to Compare Interest Rates and Loan Terms Online

Once you’ve decided which type of loan you’re taking, it’s important to research all the lenders and make sure that you’re getting the best deal. Even though differences could be minuscule, they can compound over the years and save you a lot of money in the long run.

Thankfully, digital lenders are well aware of this and they make this process easy for borrowers. By providing a loan application, the lender does the research for you, giving you all the possible loan options, so you can decide which is the best for you.

This covers both digital lenders and traditional financial institutions, including banks, so you know you’re getting the best possible deal. Besides that, you can always use a loan calculator and compare the offers manually if that’s more your style.

The Role of AI in Loan Approvals and Risk Assessment

One of the biggest reasons the digital lending industry has grown so much in the last couple of years is technological advancements, especially AI and machine learning. These advancements have made online lending a much faster and more efficient alternative to traditional loans while providing superb service.

Firstly, with the use of AI online lenders can review and approve loans much faster than banks. This can be extremely helpful to anyone in need of urgent capital, where every hour counts. It also helps them with risk assessment, so loans aren’t just given left and right to anyone.

Another big thing that AI enables is loan personification. Complex algorithms can analyze your situation, both your reason for a loan and your financial status and provide you with the best possible option. Traditional banks don’t have such flexibility, so they can’t accommodate as well as digital lenders.

AI helps with a lot of other things as well, such as structuring your payment plan and ensuring the best possible security. As we’ve still yet to see the full power that AI is capable of, it’s expected that digital lending services will only get better as the technology improves further.

The Future of Digital Lending: What’s Next?

With such exponential growth in the last couple of years, it’s easy to predict that digital lending will only continue to improve along with the technologies that enable it. Borrowers have fully embraced the comfort and simplicity that online lending provides, and have started prioritizing it over going to the bank.

This is simply a natural step forward. As many other services became digital over the years, lending followed. It allows clients to ensure they’re getting the best deal, all while not requiring tons of paperwork and hours upon hours of consulting and planning.

This industry will grow to over $500 billion in 2025, and many of the top digital lending platforms will be located in Finland. It’s sure to grow even more in the future, and Finland has positioned itself as one of the industry leaders.