The differences between fintech lending and traditional lendersįintech lending and traditional lending provide the same general service-they lend money to both individuals and businesses. → Need a more holistic view of your loan applicants' finances? Plaid’s lending APIs connect directly with borrowers’ financial accounts to enable more informed decisions, faster. Using technology, fintech companies like BlueVine can better assess lending risk and make decisions up to four times faster. This is crucial, as many small businesses are not eligible for credit from traditional institutions due to a higher perceived risk. Some fintech lending companies work to help small businesses access the capital they need to grow. Rocket closed $351 billion in mortgages in 2021, making it the leading mortgage lender in the USA.
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As a pioneer in fully online loan applications, the company has become a leader on the tech side of mortgage lending, focusing on making the process faster and easier while offering competitive rates.
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What differentiates them from typical financial institutions is the use of technology to improve the lending process, like Rocket Mortgage. Some fintech companies do provide actual loans. However, they’re able to provide these services without charging the same commissions brokers typically charge. Much like a typical mortgage broker, Better serves as a bridge between borrowers and investors. Instead of earning a commission on loans, it sources customers who want to take out a mortgage, qualifies them, then sells the mortgages to banks like Wells Fargo or institutions like Fannie Mae. Better, the fintech mortgage lending company, is a perfect example of this. Rather than providing loans themselves, some fintech companies source loans and sell them to investors. Prosper, the first P2P lending marketplace in the United States, uses this model to connect good-credit borrowers with investors and helps process loan applications. In exchange for making the connection, they collect a small fee. In P2P lending, a fintech company connects people or businesses with investors who want to lend them money.