We live in the era of cool technology and smart algorithms. Collectively they are changing the experience of dealing with personal finance.
A super-cool FinTech Start-up can literally use unthought-of methods to find leads for issuing personal loans and checking the credibility of their potential lenders.
The basic premise of this FinTech start-up is that users have installed their app and they are using this app for regular daily and other transactions !
They have access to your location 🌏
They know where do you stay. They know where do you roam around. They know if you visit posh areas and fancy restaurants in your city. They know if and where you travel. This gives a whole lot of information about your lifestyle and demographic profile.
They have access to your transaction history 💸
They know how much do you spend on groceries, fuel, entertainment, shopping, movies, travel and what not. They know or they can predict your income. They know what insurance you have, what credit cards you use. This gives a whole lot of information about your finances and spending patterns. Best part is they can predict accurately when you will be in need of extra funds and that's when they'll offer you a personal loan
They leverage gaps in evolving regulations and frameworks 🌐
FinTech is rapidly expanding space. Countries and world bodies are yet to formalize their regulations around FinTech. And that's exactly where they can serve their clients using out-of-the-box services.
There is dark (or rather gray) side to this amazing thing as well ... 🌘
All these smart companies gathering your data can create traps to allure you into personal finance blunders. What are some things we should keep in mind as retail users -
Knowledge is power. Try to get all the information about the what apps/services you are using.
Be cognizant about what data you are sharing with them. Follow Need-To-Know approach while sharing your personal data.
Follow Financial Discipline. Don't choose any option/move which deviates from your financial discipline. Be alert for traps.