What Is Fintech?
Fintech is also referred to as Financial Technology; it describes new tech seeking to automate and improve the use and delivery of financial services. Primarily, Fintech is used to help consumers, business owners, and companies better manage their lives, processes, and operations; this is made by using specialized algorithms and software used on computers and most recently, smartphones. Basically, Fintech is a blend of “financial technology”.
When Fintech first came into the limelight in early 21st Century, the term was first used in technology employed in back-end systems of reputable financial institutions. However, since then, there’s been a move towards more consumer-oriented amenities and services; this means that it has taken a more consumer-oriented approach. Presently, Fintech includes various industries and sectors such as nonprofit and fundraising, investment management, retail banking, and education, and many others.
Additionally, Fintech includes the use and development of crypto-currencies like Bitcoin. However, as much as the crypto-currency segment sees most headlines, most money lies in the traditional banking industry and its market capitalization.
Key Takeaways about Fintech
- Fintech is the integration of technology into contributions from financial services providers to improve their delivery and use by consumers.
- It works by taking contributions by financial institutions and looking for novel markets for them. Startups interrupt official operations in the finance industry by using technology to reduce operational costs and expanding financial inclusions.
- Fintech’s funding is on the increase but regulatory problems are deterring the efforts.
What is the Future of Fintech?
Fintech provides the possibility of a more inclusive technology future. There are several possibilities that are offered by the financial services ‘decentralization’; it could create ecosystems where Fintech companies and banks work more collaboratively in distribution of resources. It could make it easier to be updated in the keep up with the fast changing world.
Is Fintech the Future?
Fintech focuses on cashless payment; it’s set to include advanced payments systems and apps to facilitate online payments instantly vis-à-vis cash. Therefore, one of the most definite Fintech’s futures is cash payments methods becoming archaic and digital payments being the most preferred payment mode.
Understanding the Fintech Future
Fintech broadly refers to innovations in how humans transact businesses, from double-entry bookkeeping to digital money invention. Since the smartphone/ mobile internet and internet revolution, Fintech has now grown explosively.
Fintech was originally called computer technology and applied in the back office in trading firms and banks. It now describes a wide variety of technology advancements into commercial and personal finance.
Fintech presently describes various financial activities such as depositing checks using smartphones, fundraising for business startups, managing investments, and bypassing bank branches when applying for credit, without the assistance of human beings.
According to Fintech’sEY’s 2017 Adoption index, a third of consumers use at least 2 or more Financial Technology services; these consumers are becoming increasingly aware of Financial Technology in their daily lives.
Financial Technology in Practice
The most funded and most-talked about Fintech startups share similar characteristics; they’re created to be a challenge, threat, and ultimately seize deep-rooted traditional financial institutions. Fintech has become nimble, serving undeserved segments or offering better and faster service.
For instance, Fintech saas solutions seeks to alienate credit card companies from online shopping processes by providing avenues for consumers to access safe short-term and immediate loans for their purchases.
While rates can be quite high, Fintech offers ways for users with no or poor credit to build or improve credit histories and secure credits. Similarly, Fintech helps to streamline home mortgage processes by avoiding old-fashioned mortgage brokers; this happens via a digital-only offering that rewards users with verified approval letters with twenty-four hours after doing the applications. Fintech links borrowers with financial institutions by assisting consumers save on interest rates and keep off entrenched lenders; it offers promotional periods with zero-interest rates.
If consumers have poor or no credit, in developing countries, Fintech offers microloans; there are several apps that do deep data digs on their smartphones to get transaction histories and other unrelated factors, such as the mobile games played by the consumers. Fintech gives consumers better borrowing options than microfinance institutions, local banks, and unregulated lenders.
If you’ve been wondering why certain aspects of your financial status are so unpleasant such as applying for mortgages with traditional lenders, or feeling like it isn’t quite fit right, Fintech probably has your solution. For instance, Fintech answers questions like ‘what makes up your FICO score mysterious and how your creditworthiness is judged?”
Financial Technology’s Expanding Horizons
Until recently, financial institutions offered various services under one umbrella. The scope of the services entailed a wide range, from old fashioned banking services to trading and mortgage services. Fintech primarily divides these financial services into individual contributions. Combining technology with streamlined offerings enables Financial Technology companies to work efficiently and reduce costs associated with specific transactions.
If there’s a word that describes how Fintech innovations have directly affected traditional banking, products, trading, and financial advice, it would be ‘disruption.’ Financial services and products that used to be the realm of desktops, salesmen, and branches have presently moved towards smartphones or mobile devices. They’ve democratized away from entrenched and large financial institutions.
Fintech in 2021 & Beyond!
In such digitally powered environments, Fintech can anticipate several norms and rules to rule the digital world in future. Some of the few top-slated industries expected to define Fintech in future include:
1.Contactless Payment Methods
Cashless payment is the most recent and common payment method. Having learnt from Covid-19 implications where social distancing is the main way to avoid the deadly virus, businesses have turned to cashless transactions.
Fintech is set to roll out advanced payment systems and apps to facilitate instant and easier online payments. Fintech companies have hired web developers to incorporate digital payment systems. Cash payments are slowly becoming minimal while digital payments are becoming more common.
- Embedded Financing Will Get Many Takers
Big companies like Uber and Amazon are embracing Fintech services to provide delightful and satisfactory services to their customers. From loans to payments, mortgages to insurance, businesses today are provided embedded services to their clients.
The embedded finance industry is growing tremendously because of the unmatched customer experience it’s providing. Even old fashioned banks are beginning to embrace Fintech models, setting higher expectations in the industry.
The Covid-19 mainly affected poor people across the globe; there have been several innovations that have been developed to help the poor and oppressed. For instance, in Malaysia and Singapore, digital licenses in the banking sector have been introduced; the service is offered by the Razer Fintech Company.
The future will see several partnerships with Fintech and the continued growth of Fintech Companies. It’s safe to say that Fintech’s future is very bright!