Financial technology (also referred to as FinTech) is the use of innovative technology to deliver a wide range of financial products and services. It is intended to facilitate a multi-channel, convenient and fast payment experience for the consumer. This type of technology is effective in many different business segments, such as mobile payments, investment management, money transfer, fund-raising, and lending.
FinTech is a beacon of hope that opens the door to new business possibilities and elevates customer experience with high-end solutions that they could only dream of before.
Financial technology is a new kid in the financial industry block but it has already become changing face of the financial industry. But as with any technology FinTech is far from perfect and there are several factors like the security that will determine its growth trajectory.
They say technology is a great leveler and there can’t be a better example than FinTech because banking services which were once a domain of banking and financial institutions have seen many start-up players in this space competing with the large and established banking corporations. But this isn’t to say the traditional banking institutions are falling behind in the digital race, because they are certainly in the race. But banks because of their legacy systems and regulatory frameworks are slow to change and can’t leverage emerging technologies as quickly as FinTech companies.
The rapid growth of financial technology has been very beneficial for consumers worldwide, such as the ability to serve customers that were not previously attended to, a reduction in costs, and an increase in competition. Here are some of the ways technology brings a revolution to the financial services industry:
Brings you closer to your clients
No one took this more seriously than FinTech companies because they knew the present-day generation is online all the time, thanks to smartphones that have completely changed their expectations. Online, social and mobile technologies have created new opportunities for FinTech companies to engage with their audience and digitally handle interactions more effectively, with personalized services and relevant information delivered directly to devices. Traditional banks should pick up fast when it comes to attracting customers because consumers are expecting a lot, and they want the same kind of experience they are getting from platforms like Amazon
Digital Wallets: Money exchange never got this easier
What is common among PayPal, GooglePay, Payoneer, MPeesa, and ApplePay allow you to send any amount to anyone with the click of a button without visiting a bank, something not possible a few years ago. Mobile payments or peer-to-peer apps have completely changed the way users handle money today. No wonder most smartphone users regularly use mobile payments apps because they are simple to use, and offer convenience, flexibility, and much-needed security. What’s more, these P2P apps have brought anytime, anywhere banking services to their consumers in a cost-effective way.
Reaching unbanked and underbanked
Don’t have time to go to the bank or are tired of standing in long queues outside ATMs, then you have a good reason to use mobile money apps. But there are many people, especially those in rural areas; access to banks and ATMs is a remote possibility. Such mobile money apps offer tremendous opportunities to make cashless transactions and enjoy banking services from the comfort of mobile. FinTech is bridging the gap by helping unbanked and under-banked gain access to banking services.
Disrupting traditional lending
For several decades the traditional lending process was characterized by filling up loan application forms and submitting a variety of documents, and there’s little chance of a swift response, and even after all this time, there’s no likelihood that you will get a positive response. And even if everything goes right, you’re unlikely to receive the funds anytime sooner.
But all this is a thing of the past, thanks to FinTech solutions borrowing money got easier and quicker. No more do you have to visit the bank, do a lot of paper, and wait for days to listen to the good news. Borrow money in hours that used to take weeks or even months without all that stress and tension, all from the comfort of home. Digital technology is at the heart of peer-to-peer lending success and that has enabled FinTech players to keep costs to a minimum and offer products and services tailored to meet the needs of specific target groups. P2P lending is one such solution that promises to provide a lot of benefits for both borrowers and lenders.
Better payment systems
This type of technology can make a business more accurate and efficient at issuing invoices and collecting payments. Also, the more professional service will help to improve customer relations which can increase the likelihood of them returning as repeat buyers.
Rate of approval
Many small business ventures are starting to use alternative lenders like those involved in financial technology because it has the potential to increase accessibility and speed up the rate of finance approval. In many situations, the application process and time to receive the capital can be completed within 24 hours.
Greater convenience
The companies involved in financial technology make full use of mobile connectivity. This can significantly increase the number of people who can access this type of service and also increase the efficiency and convenience of transactions. With consumers given the option to use smartphones and tablets to manage their finances, a business can streamline its service and provide a better all-around customer experience.
Efficient advice
Many of the latest systems rely on Robo-advice to give people guidance on their finances. This can be a very quick and low-cost option to get useful information on investments, as well as to limit a person’s exposure to risk. However, this type of service won’t be able to give the most in-depth advice that would come from a professional adviser.
Advanced security
Using the latest security methods is necessary to ensure more people are confident in using this type of financial service. The need to harness the latest mobile technologies has resulted in a major investment in security to ensure customer data is kept safe. A few of the latest security options used by those in this sector include biometric data, tokenization, and encryption.
Staying on top of financial services technology is important for everyone looking to start and continue and securely grow their business or services that are offered online. It will help you to decide which decisions need to be made and when, after reading some of the information. A well-informed person will grow with the advances that are being made and continue with an upward climb to success.
