16 November 2018
According to Wikipedia, online loans or called Peer-to-Peer Lending (P2P Lending), is the practice of lending money to individuals or businesses through online services that match lenders with borrowers. Since peer-to-peer lending companies offering these services generally operate online, they can run with lower overhead and provide the service more cheaply than traditional financial institutions.
Back a few days earlier in November 2018, in my country, Indonesia, some companies that use the online loan as their product (peer-to-peer lending) have been reported violating their customer’s privacy. Online loan companies use the authorized access to the customer gallery and blackmail the customer to pay on time. If the customer doesn’t pay on their deadline, the company will force them to pay whatever it takes. This is a serious case since the privacy violation is a big problem and it breaks the law.
Business is business. But every business comes with responsibility and regulation. You can’t just lend people some money without mentioning the government.
In Indonesia, we have OJK (Otoritas Jasa Keuangan) or Financial Services Authority. This government organization has a responsibility to clarify all kinds of financial business. If there’s an administrative problem with the company, this organization could ban the company and forbid running their business again. An important action for Indonesia that still has so much to learn in financial technology and business.
On the other hand, if the company has been authorized by OJK, they can run their business and develop their website or app. OJK will supervise all financial companies. If they break the law during their business, the OJK could sue them and make them pay the price.
A multi-layered security level will be needed if you want to secure your precious data. Technically, if you want to keep all the data safely, you should start by breaking the whole process of the online loan. An online loan should be started with registration. Registration will bring the whole data of your client to be analyzed.
After that, if both the client your company agree with all requirements to fulfill the online loan, you should record all the data about your client in your database. After that, you can proceed with the loan and send the money right away.
Mostly, online loan websites will explain the simplicity of borrowing some money. But besides the simplicity, you should educate the client that paying the installment is not simple. There is a chance that your company has to force you to pay. And it’s legal. It’s part of the risk. So, make sure both of you and your client are ready for every risk.
There are at least three things for a client to decide. When a person wants to borrow some money, he or she will see the maximum loan first. For example, if the client wants to borrow 10 million, however, you only have 8 million, then it’s exceeded your limit. The client will seek another company.
The client could choose the due date and see the interest rate as well. If the client agrees to these, you can keep the administrative things and send the money right away.
Every business has its own risk. Including this one. Especially if this is all about money. There’s a chance that your lending could be an NPL or Non-performing Lending. Non-performing Lending means your client doesn’t pay the installment regularly. Mostly, you can get zero payment even if it is past the due date. This could make a huge red ink and could ruin the whole business. Perhaps even make your business comes to an end. So, make sure you can make sure the client is ready to pay the installment right after they get the money and the due date start counting.
Shortly, every huge revenue has a huge loss as well. If you are ready to take the risk, then simply start it up. And if you need a hand to make the website, app, or even both of them, then you can contact us, and let’s discuss the whole plan for your development process.
See you in the next article!
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