You might find yourself wondering about the origins of online lending, and how it has become the major industry that it has evolved into during recent years.
The origins of online lending have evolved from standard lending practices combined with the increased ease and convenience of using the internet for a variety of purposes.
Before you can really understand the origins of online lending, though, you need to take a few moments to understand the standard banking practices that it evolved from and how internet connectivity has helped lending to grow from banks and finance companies to online services that allow you to research and apply for loans in the convenience of your own home.
Lending before the internet
The origins of online lending begin before the word “online” had much of a meaning at all. Before the advent of the internet, and before the “personal computer” was even really conceived, personal banking and lending was much different than it is today.
Loan applications would take several days or weeks to be considered, and several banks in an area might share one or two loan officers who had to travel from bank to bank… meaning that there were only certain days on which you could apply for the loan that you desired.
Keeping track of loan payments could also be a hassle, and mistakes weren't uncommon and often resulted in either overpayment or late fees.
Computers improving communication between banks
Once personal computing became a reality, the origins of online lending truly begin. It didn't take long for banks to realize that these computers could be put to use making both banking and recordkeeping much easier… bank systems could connect via modem and telnet in order to share information, and the records of account holders and borrowers could be accessed much more quickly from a computer database.
Of course, early computing was quite simple by today's standards, and mistakes did happen… but the convenience of the computer systems and the gradual increase in their reliability often made up for the drawbacks and enabled banks to increase both productivity and the ease of the lending process.
Following the origins of online lending, simple networks such as those that banks and other businesses used to connect with each other eventually gave birth to the world wide web of the internet.
As websites for products and businesses became more common, banks slowly but surely began to advertise their services and features via some of these websites.
As internet technologies increased, many of these banks began offering rudimentary account access and other services via their websites so as to stay ahead of their competition… thus was born internet banking.
As technology continued to grow, so did the services offered by banks online; full account access, banking inquiries, and loan applications all developed as the ability to implement them was created.
From the humble origins of online lending grew a huge worldwide industry. Lending companies developed that were completely separate from standard banks… with the lower overhead of operating a website when compared to that of running a bank, they are often able to offer competitive if not lower interest rates and can process loan applications and transfer funds faster than many standard banks and finance companies.
Of course, even with the current convenience of online lending services the future may hold additional conveniences and services as internet and computing technologies continue to develop and evolve… meaning that online lending will most likely continue to grow in popularity and will be able to offer more and more services to customers at competitive rates and reasonable terms.
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