Debt servicing has long plagued the US market. However, financial apps are determined to change that. With the financial technology available, we can make debt servicing easier, allowing more companies to facilitate credit transactions and help more people get out of debt faster.
Let’s highlight the 9 ways that financial apps are changing debt servicing:
1. Simplifying Debt Servicing
Debt servicing as a whole is a popular market within financial services. Issuing credits, remitting payments, and credit cards are key services for a number of businesses and are huge add-on features for conglomerates.
Financial apps not only make debt servicing easier but also allow SMEs and smaller businesses the option to provide debt servicing when this feature was unavailable to them previously. Debt servicing includes a level of compliance to mitigate fraud, credit risks, and other penalties. So while a company may be theoretically eligible for debt servicing, they may not be able to access it due to their smaller general revenue or other eligibility rules.
Debt servicing features in payment apps open the personal finance market to more vendors and businesses to serve debt servicing and more everyday people to access debt servicing. While high debt is a notoriously bad thing, sometimes debt helps grow personal capital, especially if getting a loan is not an option.
Therefore, by simplifying debt servicing, more opportunities for expanding credit and financial goals are possible.
3. Comprehensive Yet Easy Identity Verification
Identity verification is an essential requirement in financial services. The financial market is plagued with financial crime and terrorist financing, but identity verification (through the Bank Secrecy Act) aims to reduce the occurrence of this and reduce risk to the financial payment system.
Identity verification in the U.S. payment system is called Know Your Customer (KYC) or Know Your Business (KYB) and it’s an improvement that exists on top of Customer Due Diligence (CDD) best practices. For bootstrapped fintech firms, KYC can be a challenge. KYC requires that you collect personally identifiable information (PII) about clients, which is useful for verification purposes. But this means that businesses must access sensitive data. Luckily, financial apps like Sila reduce those risks while helping more businesses through the complicated compliance features.
Financial apps are now streamlining these processes, making it easier for fintech companies to perform identity verification and move onto product management, and providing exceptional debt servicing.
3. Combined Payment Options
When individuals and companies work with multiple debt services, it can be difficult to keep track of each. However, financial apps are able to tap into the lush financial infrastructure on the back-end to simplify the payment structure on the front end.
With a financial payment infrastructure like Sila, vendors can integrate multiple debt servicing lenders and streamline payments on a payment dashboard. And, using the digital wallet app, clients can funnel all their debt payments into one easy app.
4. Payment Automation Features
Financial apps are capable of revolutionizing the basic debt payoff plan. With smart contract capability, more payments can be automated to change how consumers interact with their existing debt. Financial apps can automate mortgage payments, minimum payment plans, and budgeting plans too.
Automation and other powerful tools can expand payment options and unburden everyday individuals with the need to track their debt payoff plan. So, individuals will experience less stress trying to coordinate their debt payments and more time focusing on what matters!
5. Multiple Payment Source Options
Financial apps are not only able to work with multiple debt services, but they can also securely connect with multiple revenue sources. Customers can link direct deposit, personal finance accounts, and more so they have the freedom to pay their debts off how they want.
Multiple payment sources provide additional selling points for debt service providers as they can sell this flexibility to clients.
With multiple payment options, clients may be more interested in taking advantage of more financial services than figuring out the funds flow. Multiple payment options make it easier for customers to contribute to a financial goal, savings goal, or manage their money how they want.
6. Faster Debt Payoff
Of course, one of the biggest benefits of financial apps and debt servicing is their ability to facilitate faster debt payoffs. Debt is a huge problem in US and global markets, so with the ability to pay off debt (and lower interest payments) faster, many Americans are relieved of these burdens.
Financial apps give the flexibility to pay off credit card debt, pay off student loan debt, and figure out other financial problems like budgeting. For example, consider a credit card debt relief and debt consolidation company. With a financial app, they can create a virtual account to consolidate payment sources and pay down a debt on a different debt lender (on the back end) through automated monthly payments.
While not perfect, the ability to pay off debt faster will only improve the lives of more people in the U.S., reducing financial stress and improving credit score ratings. More businesses can contribute to these features and offer automated debt servicing for clients with other products, like a savings account and credit card.
7. Better Debt Servicing Management for Vendors and Businesses
Debt servicing is a highly profitable business, and customers increasingly desire these options when working with companies. However, debt servicing is notoriously difficult to manage.
Luckily, financial apps are giving businesses and vendors better features for managing their debt servicing, making it more approachable as a service offering.
From automating a monthly payment, to simplifying KYC maintenance and more, vendors and businesses can spend more time improving their products rather than putting out fires. They also can add additional features, like education around spending habits, investing, and savings tips.
8. More Debt Servicing Features Available
Financial apps offer more debt servicing features, too. For those businesses who already have debt servicing available, this gives them the opportunity to expand their offerings. Instead of selling debts to debt collectors, financial apps help them to manage this process in-house.
Additionally, businesses who were on the fence about debt servicing may feel more inclined to add this feature to the banking product, expanding their offerings and staying competitive within their market.
Where debt service providers may have been limited to the amount of credit or interest rate options they can offer, financial apps provide more cash flow opportunities. With fewer challenges related to the financial infrastructure, more businesses will find that they can offer up competitive rates and unique products, like rewards programs and attached savings accounts too.
9. Improving Credit Scores By Eliminating Debt Faster
Finally, financial apps are changing debt servicing because they are improving the credit world as a whole. With more people gaining access to credit and faster debt elimination, credit scores are improved and more financial wealth is available to the population.
Having bad credit restricts individuals from buying cars, contributing to a savings goal, and so much more. But by eliminating debt faster, credit scores and personal finance improve, giving people more financial freedom.
Are you ready to be a part of this financial revolution? Reach out to our sales team today!