Why are Mobile Loans on the Increase?

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SMS or mobile loans seem to have sprung up overnight.  Every bank is offering a short term SMS or payday loan it seems, and it is understandable that people may be a little overwhelmed by the whole thing. So, are these mobile loans on the increase and if so, why?

Technology Driven Banking

Part of the reason for the increase in SMS loans is technology. Modern banking has moved from bricks and mortar branches to online and now to mobile. There may be a perception that SMS loans have increased because more people have mobile phones and more people bank via their phones. They even plan their monthly budget on mobile phones; click here for details. This does provide some logic and while it provides a more psychological answer it is not necessarily the right answer or reason for mobile loans popping up everywhere.

Banking Changes

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Technology has changed the face of banking and banking itself has also evolved and changed. Smaller financial institutions have been able to find their place in the market much easier than they did before mobile phone saturation. Becoming a lender rather than a full-on bank with accounts and investments is somewhat easier than one might imagine. Provided the country-specific rules of banking, especially lending, are adhered to and obligations met becoming a short-term or mobile lender is straightforward. For this reason, more lenders are in the open market and for this reason, the majority are extremely trustworthy.


Part of the reason for making it easier for smaller lenders and financial houses to enter the market was to create competition.  With only a handful of lenders, the choice for borrowing was limited and of course, interest rates were nowhere near as competitive as one might imagine. Bringing more lenders into the market has led to some innovative short term financial solutions, many of which come with highly competitive interest rates and low fees. The SMS and Mobile loan sector are one of the growth areas for many financial institutions and banks. Moreover, because the market is open to competition new players that come in the form of retailers or even traditional banks are adding excitement to the world of borrowing.

In demand

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By far the biggest reason for the rise in SMS and Mobile lending solutions is market demand. The economy is tough now and short term, easy to access loans are becoming an essential backstop for many people. With the costs of many goods risings, a salary almost static more and more people are finding more month at the end of their money than ever before. Sure, the convenience of a short-term loan applied for in a matter of seconds is enticing but SMS and Mobile loans are really being used to stretch people’s money. Because more people are having to stretch their money further, they are continually looking for a short term, easy to access solution that meets their needs, and this brings more lenders to the growing market. Better rates, lower fees, and third-party incentives are all part of the reason for SMS and mobile lending growth.