The Painful Process of Processing A Credit Card

I am very happy with my credit card because it allows me to manage my money to reach the end of the fortnight without problem. However, its approval took about three months and another card was not approved because it did not have a history in a bank other than my axis account. This is not only my case, I know several people who have had to go through a long and tortuous process of applying for a loan.

The problem of having limited access to credit affects liquidity management, meeting goals, and investment in development businesses. The most serious thing is that, given the lack of financial education, few Mexicans know that if you do not have a credit history, it is more difficult to access other credits (automotive, business, mortgage, for example) or better interest rates of credit. Therefore, it becomes a vicious circle in which if you do not have credit, you cannot access the credit you need at the institution you want. This leaves out potential clients who do have good payment capacity, but who have never used a loan.

Now, we know that the most important thing for financial institutions when approving a loan is to verify the ability to pay . In that sense, the so-called neobanks, totally digital banks without branches, have incorporated new mechanisms to evaluate the payment capacity of users and in a couple of days, and not months, they tell you if your credit was approved, or, They give you a personalized credit according to your income.

One of the new credit evaluation mechanisms is open finance . This model allows financial institutions to consult your income and expenses history to determine your ability to pay according to your savings, debit, payroll or investment accounts of any financial institution in Mexico. Therefore, with open finance it will not be necessary to have a bank or fintech account where you want to request a loan, nor will it be essential to use departmental or credit cards.

The best of all is that the information consultation is totally digital and is done in seconds, therefore, you do not have to go to a physical branch to process the credit card and you do not have to send bank statements in PDF or images . In this way, you will not have to wait months to receive approval for a loan.

Other credit rating mechanisms use alternative data, such as the information found on mobile phones or the purchase history in online stores, the information itself from social networks, among others. All digital information says a lot about who we are, therefore, it serves the algorithms to build a credit score that complements the information that is or is not available in the Credit Bureau. Consequently, it is more likely to obtain a personalized credit according to your ability to pay.

The technology is advancing rapidly and is ready to go . Before, traditional financial institutions had a technological limitation, therefore, they had to do everything manually and it took months to evaluate a person’s profile. Today there is a large amount of digital data and it is cheaper to access it through various providers. There are no more excuses for financial services to be slow and exclusive, even with banked users.

This reminds me of the history of the iPod, which was thought before the technology existed to store information in a very small space. However, when the technology was developed in Japan, Steve Jobs did not hesitate and bought that technology, which resulted in a hit and a technological revolution. Financial institutions should not hesitate to acquire the necessary technology to improve their services. They do not have to develop everything from scratch , currently, there are different providers that can help update their services.

We know that many entities are reluctant to adopt new technologies, but also, many are committed to innovation , the result will be more credits approved more quickly with a greater volume of the market. At the end of the day, people will choose services that are at the forefront and companies that do not modernize will be left behind.

Without a doubt, it is not easy to start this transformation process, but I am sure that financial institutions have the ability to overcome the obstacles that arise. They can offer better financial services for all and boost economic development and help improve people’s quality of life. What is the need for a person to waste their time asking for a loan, when they can focus on meeting their goals.

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