This originally appeared as a section in a very long article called "The Rapidly Changing Face of Computing". It is part of a series of articles describing various innovations in technology. The article appeared on a Compaq/Digital run website. The original location was: http://www.digital.com/rcfoc/980921.htm

Loans Online.

by Jeffrey R. Harrow
Senior Consulting Engineer
Corporate Research & Advanced Development,
Compaq Computer Corporation
jeff.harrow@digital.com

Insight, analysis and commentary on the innovations and trends
of contemporary computing, and on the technologies that drive them
(not necessarily the views of Compaq Computer Corporation).

http://www.digital.com/rcfoc
ISSN: 1520-8117

Copyright (c)1998, Compaq Computer Corporation

I must admit to being surprised to find that online loans are already a half-billion dollar business; $482 million in loans were originated on the Internet last year. And it's likely to get bigger -- $40 billion bigger by 2001, according to estimates by Forrester Research described in the Aug. 27 TechWeb (http://www.techweb.com/wire/story/TWB19980827S0008).

But I can certainly understand why people shop for loans online. With mortgage rates seeming to fall every day, the ability to instantly check rates and compare the offerings from different lenders at the click of a mouse sure beats the old way of spending hours on the phone. In fact some sites, such as Microsoft's Home Advisor, let you define what type of loan you're looking for, and it will Email you with an alert when any thresholds you set are crossed (http://homeadvisor.msn.com/ie/trackers/ratetracker.asp)!

Once you decide on a loan you do want, some sites further streamline the "old," time-and-paper-intensive process. For example, using new tools such as ARC Systems' "LT2k," a lender can take an application and perform an online credit check in as little as 15 seconds, approving (or not) your loan right then! As ARC Systems (http://www.arcsystems.com/) puts it,

"By providing real time on line access to credit reporting bureaus and assuring accuracy of credit reports, the system increases speed and quality of the underwriting process. By including a rules-based decisioning system, automated underwriting decisions, based on a lender’s specific decision criteria, can be returned in seconds (on-line), versus days normally required."

I found another bit of their material that, to me, crystallizes just why the whole genre of "online business" is becoming so valuable -- for both consumers and vendors alike:

" LT2k will automatically underwrite the loan and will calculate the maximum loan amount, the interest rate, the debts that should be paid off, the monthly payment, the monthly savings, and the loan conditions.

By automating the process, LT2k™ can underwrite loans at a lower cost than the traditional method of transferring the information, pulling credit and responding back to the borrower."

I am now beginning to wonder, as such capabilities become more widely available, how long it will be before people (and businesses) won't be able to conceive of dealing with loans "the old way..."

Convergence -- the coming together of computing, communications, content, and consumer electronics, IS changing the rules.