The role of fintech in consumer lending is a trending topic that has appeared in recent IELTS Writing Task 2 exams. Its relevance in today’s digital economy makes it a likely subject for future tests as well. To help you prepare, we’ve selected a question that closely resembles past exam topics:
Some people believe that financial technology (fintech) companies are revolutionizing consumer lending and making it more accessible. Others argue that traditional banks still play a crucial role in providing loans. Discuss both views and give your own opinion.
Let’s analyze this question and provide sample essays for different band scores.
Question Analysis
This question requires you to:
- Discuss the view that fintech is revolutionizing consumer lending
- Discuss the opposing view that traditional banks remain crucial for loans
- Present your own opinion on the matter
Remember to address all parts of the question and provide relevant examples to support your arguments.
Sample Essay for Band 8-9
Financial technology, or fintech, has undoubtedly transformed the landscape of consumer lending in recent years. While some argue that these innovative companies are making borrowing more accessible than ever before, others contend that traditional banks continue to play an indispensable role in the loan market. In my opinion, both fintech firms and established banks have important parts to play in meeting consumers’ diverse financial needs.
On one hand, fintech companies have indeed revolutionized lending by leveraging technology to streamline the borrowing process. These firms use advanced algorithms and big data analytics to assess creditworthiness quickly and efficiently, often approving loans within minutes. This speed and convenience have made borrowing more accessible to a wider range of consumers, including those who may have been underserved by traditional banks. Moreover, fintech lenders often offer more competitive interest rates and flexible terms, further enhancing their appeal to borrowers.
How peer-to-peer lending changes banking is another aspect of fintech’s impact on consumer lending. These platforms connect borrowers directly with individual lenders, bypassing traditional financial intermediaries and potentially offering more favorable terms for both parties.
On the other hand, traditional banks still maintain a crucial position in the lending market. These institutions possess vast resources, established infrastructure, and decades of experience in risk assessment and management. Many consumers trust banks for their stability and regulatory compliance, particularly for larger loans such as mortgages or business financing. Furthermore, banks often provide a more comprehensive suite of financial services, allowing customers to manage all their financial needs under one roof.
In my view, the coexistence of fintech companies and traditional banks offers the best outcome for consumers. Fintech firms drive innovation and improve accessibility, pushing the entire industry to evolve and better serve customers. Meanwhile, traditional banks provide stability, comprehensive services, and the human touch that many still prefer for complex financial decisions. The ideal scenario is a symbiotic relationship where fintech and banks collaborate, combining their strengths to offer consumers the most efficient, secure, and tailored lending solutions.
In conclusion, while fintech has undoubtedly revolutionized aspects of consumer lending, traditional banks continue to play a vital role. The future of lending lies not in the dominance of one over the other, but in their complementary coexistence and collaboration, ultimately benefiting consumers with diverse and flexible borrowing options.
(Word count: 395)
Sample Essay for Band 6-7
Nowadays, fintech companies are changing how people borrow money. Some think these new companies are making it easier for everyone to get loans. But others say that old banks are still very important for lending money. I will discuss both sides and give my opinion.
Firstly, fintech companies are using new technology to make borrowing easier. They use computers to check if people can pay back loans very quickly. This means more people can get loans, even if they couldn’t before from big banks. Also, these new companies often have better interest rates, which makes borrowing cheaper for people.
However, traditional banks are still important for lending. They have been around for a long time and have a lot of money and experience. Many people trust banks more because they feel safer. Banks also offer many other services like savings accounts and credit cards, which is convenient for customers.
How fintech is disrupting traditional banking shows that new technology is changing how we borrow and save money. But this doesn’t mean old banks will disappear.
In my opinion, both fintech companies and traditional banks are important for lending. Fintech makes it easier and faster to borrow money, especially for small loans. But banks are still good for big loans like house mortgages. I think in the future, fintech and banks will work together to give people the best ways to borrow money.
To conclude, fintech is changing how we borrow money, but traditional banks are still important. Both have good things to offer, and together they can help more people get the loans they need.
(Word count: 295)
Sample Essay for Band 5-6
In today’s world, there are new companies called fintech that lend money. Some people think they are very good and help many people get loans. But other people say old banks are still important for lending money. I will talk about both ideas and say what I think.
Fintech companies use computers to give loans fast. This is good because more people can get money when they need it. These companies sometimes have cheaper loans too. This helps people who couldn’t get money from big banks before.
But old banks are still important. They have been around for a long time and people trust them. Banks also do other things like keep money safe in accounts. Some people like to talk to a real person when they borrow money, and banks have this.
I think both new fintech companies and old banks are good. Fintech helps people get money fast and easily. But banks are good for big loans like buying a house. Maybe in the future, they can work together to help people more.
Impact of fintech on financial inclusion shows how new technology can help more people use money services. This is important for poor people who couldn’t use banks before.
In conclusion, fintech companies and banks are both important for lending money. They have different good things, and together they can help more people.
(Word count: 219)
Explanation of Band Scores
Band 8-9 Essay:
- Fully addresses all parts of the task with well-developed ideas
- Uses a wide range of vocabulary accurately and flexibly
- Uses a variety of complex structures with full flexibility and accuracy
- Presents a clear position throughout the response
- Uses cohesion in such a way that it attracts no attention
- Demonstrates full awareness of style and tone
Band 6-7 Essay:
- Addresses all parts of the task, though some parts may be more fully covered than others
- Uses an adequate range of vocabulary for the task
- Uses a mix of simple and complex sentence forms
- Presents a clear central topic within each paragraph
- Has a clear overall progression
- Uses cohesive devices effectively, but cohesion within and/or between sentences may be faulty or mechanical
Band 5-6 Essay:
- Addresses the task only partially; the format may be inappropriate in places
- Uses a limited range of vocabulary, but this is minimally adequate for the task
- May make noticeable errors in spelling and/or word formation that may cause some difficulty for the reader
- Uses only a limited range of structures
- May not always provide a clear progression of ideas
- Uses cohesive devices but these may be inaccurate or repetitive
Key Vocabulary to Remember
- Fintech (noun) /ˈfɪntek/ – Financial technology
- Revolutionize (verb) /ˌrevəˈluːʃənaɪz/ – To change something completely and dramatically
- Accessible (adjective) /əkˈsesəbl/ – Easy to obtain or use
- Creditworthiness (noun) /ˈkredɪtwɜːðinəs/ – The extent to which a person or company is considered suitable to receive financial credit
- Algorithm (noun) /ˈælɡərɪðəm/ – A process or set of rules to be followed in calculations or problem-solving operations, especially by a computer
- Symbiotic (adjective) /ˌsɪmbaɪˈɒtɪk/ – Involving interaction between two different organisms living in close physical association
- Infrastructure (noun) /ˈɪnfrəstrʌktʃə(r)/ – The basic physical and organizational structures and facilities needed for the operation of a society or enterprise
- Collaborative (adjective) /kəˈlæbərətɪv/ – Produced by or involving two or more parties working together
- Disrupt (verb) /dɪsˈrʌpt/ – To radically change or destroy the structure of something
- Innovation (noun) /ˌɪnəˈveɪʃn/ – A new method, idea, product, etc.
Conclusion
The role of fintech in consumer lending is a complex and evolving topic that is likely to appear in future IELTS Writing Task 2 exams. By understanding different perspectives and practicing with sample essays like these, you can improve your ability to tackle this subject effectively.
To further enhance your skills, try writing your own essay on this topic or related ones such as:
- The impact of digital currencies on traditional banking systems
- The role of artificial intelligence in financial decision-making
- The challenges and opportunities of mobile banking in developing countries
Remember to focus on structure, vocabulary, and coherent argument development. Feel free to share your practice essays in the comments section for feedback and discussion with other learners.
Role of financial institutions in economic development is another related topic you might want to explore to broaden your understanding of the financial sector’s impact on society.