This is a blog post about what the writer sees as a problem for some FinTech companies (especially ZestFinance) when it comes to a lack of caution when it comes to lending money. The writer argues that the main issues with these companies has been an over willingness to lend to anyone, and overconfidence in the power of technology and algorithms to make lending decisions.
It feels like the implied argument that the writer is making is that it is up to FinTech lending companies to slow down and adapt more of the norms and standards of the banking industry. While I understand the logic of this idea, it does seem to go against the very point of FinTech. FinTech, by it’s very nature, is suppose to be able to move faster and be able to take more risks than the status quo.
However, I do agree that since these lending FinTech companies are dealing with other people’s money, it would be smart of them to be smarter about who they give loans to. As the article points out, an over willingness to give loans to just anybody contributed to the 2008 economic meltdown. It is true that just because you can give someone a loan, doesn’t mean that you should. It may seem altruistic to give someone who was denied by a bank a loan, but this could do more harm to the recipient of the loan. One point that I more or less agree with is that FinTech companies do need to be careful about depending too much on algorithms when determining who to give a loan to. Ideally, there should be a way to use technology and still provide a human perspective with expertise to make a smarter decision.
https://www.fool.com/investing/2017/02/08/lessons-for-fintech-from-the-history-of-banking.aspx