The advent of fintech has resulted in the financial sector quickly adjusting to the changing landscape that fintech innovations have brought. This is evident with how the older, established organisations are having to look for newer ways to do their business so as not to get left behind. Research has it that fintech generates revenues amounting to billions of dollars per year and these figures are expected to double by 2030. Financial technology has combined the latest technology developments with applications or financial services thus it has greatly helped businesses especially start-ups- to disrupt the once dominated industry and therefore provides better financial services to individuals and businesses alike. In this article, we are going to take a closer look at financial technology.
In the simplest of terms, fintech is used as a description of financial technology, that is any industry that uses any form of technology in financial services ranging from consumers to businesses. "Fintech is a competitive market where hitting the road running is crucial.", according to AllFront. Fintech involves, or better yet describes any company that uses software or other technology in the provision of financial services. The majority of the products provided by fintech are designed to be used with ease by connecting the consumer’s finances with technology. It has collaborated with numerous applications thus completely revolutionizing the access of finances by consumers. From insurance and investment companies to mobile payment apps like PayPal, fintech is a game-changer that poses a risk to financial institutions such as banks. Financial technology comprises a plethora of applications that are focused on the consumer, and the tools provided by this technology are changing the way consumers access, manage, track and facilitate their finances.
Fintech targets to reach 2 billion people globally without bank accounts and it provides an option for this large number of consumers that they can access financial services even without the need of financial institutions. In a nutshell, fintech has been developed by easy to use technology to enable consumers to access their financial lives.
Below are good examples of how fintech is used in various sectors:
Mobile Payments. Today smartphone users use mobile payments as part of their daily lives. Numerous services have been invented that allow consumers to make payments and exchange money on their mobile devices or online. Examples include PayPal, Venmo, Alipay, etc.
Insurance. The insurance industry has not been left behind, insurtech as it is now called includes everything ranging from home insurance to car insurance. These insurtech startups are amazingly attracting funding.
Crowdfunding Platforms. These platforms such as Patreon and others allow users to send and receive money from other users on the same platform and also have allowed businesses or individuals to gather funding from various sources all in the same place. It has now been made possible to directly go to investors to have them to support your project or company.
Investment Management. Since the development of apps that enable traders to stock, the lives of investors has been made easier since they can buy, sell and trade stocks on their mobile devices.
Fintech innovation not only comes with a reduction in cost for businesses but also for the consumer. Since there are no costs associated with traditional firms such as salaries, rent and advertising these costs can be saved by these firms leading to investing in their clients. The automation of many processes has proven more useful in things like lending risk more accurately, also less physical presence is required thus lowering the cost of services that they provide to their customers.
Through the great use of mobile connectivity, fintech companies have enhanced the efficiency and convenience of transactions. This means that customers have a better experience, increased transparency and the information is more accessible to the public. By making sure that this information is at the fingertips of consumers it results in better services to the public. Also, financial technology has helped to avail financial products to individuals who do not have bank accounts thus catering to every single person in need of financial services globally.
The advancements of fintech have made it possible for online or digital lenders to deal with the application and approval process within a day. Consumers demand services instantly thus with less information provided by the customers they can get all the services they need in a matter of seconds if not minutes. Thanks to the automation process and the use of Artificial Intelligence that are expected to power customer interactions with many consumers preferring machines over humans.