For the last twenty years, we have been waiting for true “paperless” loan and credit applications. The concept first arose in early home banking applications and patents. For example, in the early 1980’s a person named Lawrence Lockwood filed a U.S. patent application for an “Automatic information, goods and services dispensing system”. The application issued as a patent several years later. One interesting point is that the patent discussed a vision of a system where customers could remotely apply for credit, insurance policies, etc. Here’s a quote from the application:
The central data processing center 1 includes a central processing unit 22 and memory 23. The memory 23 stores program information and information on insurance policies and prices for various insurance companies, which are periodically up-dated from the terminals 4 of the various companies, and information on policy quotes and sales, which can be accessed periodically by the respective insurance company terminals. The processing unit 22 operates in response to program instructions to perform insurance quotation calculations in response to customer information received from any of the terminals, to send quotation data to the respective terminal, and to receive credit card information from a terminal and access the credit information terminal for credit approval or disapproval of a particular credit card. If a customer makes a purchase order at a particular terminal after credit is approved, the central data processing unit stores the policy information and sends instructions to the terminal to issue a policy.
Has the system become real? Here it is over twenty years later, and most types of credit require people to sign physical paperwork. Certainly, you can’t get a home loan without visiting a broker’s office. But there are many types of credit that you can get without filling out actual physical paperwork. For example, many short-term lenders use paperless application sysetms to provide credit (these are often referred to as “faxless payday loan applications“).
One big stumbling block for online loan applications is the need to ensure that customers are able to electronically sign and accept loan documents. As technologies improve, and electronic signatures are easier to obtain, more and more types of credit will likely be available online, from the comfort of your own home.
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