What is fintech?
You might ask, what is exactly fintech? Fin + tech = Financial technology, the use of technology to escalate the finance sector to improve financial services and activities. It is an emerging industry that provides a platform to cover a range of approaches in the delivery of financial services that is accessible, easy and fraud-free. Fintech is already solving issues in the financial sector especially with money transfer like adding, sending or requesting money, which is crucial for people and businesses regarding day to day activities and tasks. Fintech offer services such as paying various bills like ISP, utility and credit cards on time, paying at merchant outlets, money transfer, paying for daily conveyance to work, shopping, and much more. All of these services can be done within seconds without physically being anywhere and connects everyone together, bringing services much closer than ever before, contributing to a brighter and efficient future.
Fintech, also caters numerous services to financial, banking and lifestyle needs that cover an expansive range such as individuals, corporates and businesses. Businesses benefit with new financial technology payment methods, lending and receiving money, finance management, and crowdfunding. This brings a revolutionary change in major fields such as asset management, money transfers, remittance and investments. In the US alone, Fintech investments hit a record $52.5 billion in 2018, driven by acquisitions, mergers and Venture capital.
According to The Economist, Fintech is the next big thing, with Fintech firms growing rapidly. So far, the firms have attracted $12 billion in investment alone in 2014, up from $4 billion in 2013. Unlike mainstream banks, Fintech firms differ by not exerting heavy regulations. Several financial institutions have started to embrace Fintech solutions and implementations in their practices because of the painstaking measures and heavy regulations they face with central banks. The financial institutions range from both fresh startups and established ones who are adopting Fintech to better facilitate their products and customers. Several other companies such as tech and electronic like IBM, Samsung, Microsoft and many more are trying to replace or enhance the usage of Fintech services in their everyday applications as well. According to a report from App Annie, users in the UK have used their banking apps to keep tabs on their bank accounts more than seven times a week in 2018 alone. That not only demonstrates the power of technology in finance (Fintech) but also, points toward traditional financial institutions to face pressure to “maintain their relevance in the face of Fintech competition.”
Also, Fintech is addressing several gaps in socio-economic factors. This will unify the society on a larger scale and bring financial services closer and convenient for everyone, whether it is including the unbanked population, gender barriers, Venture capital, loans or strict & rigid regulations.
How Fintech is changing people’s lives
70% of Americans think that Fintech solutions are improving their financial health via the Internet and making financial transactions easier than ever. Yet, today, 1.7 billion people are unbanked globally including people from both developing and first world countries. Most people in developing countries don’t have a bank account as they do not see a reason why because most of their economic activities involve traditional ways of exchange and cash transactions, and also they are not made aware of fintech or its practices. Fintech can change this scenario if adopted with the right regulatory framework and technical support.
Source: PwC Global
Fintech is changing people’s lives all over the world. Countries such as China, Singapore, Malaysia, Bangladesh and India have been successfully implementing finance based technology apps. In some countries, the response has been tremendous and in some, the response is slow but steady and people are slowly learning and accepting the Fintech methods and it’s know abouts. People from Asia, Europe, North America and Africa are reaping benefits of Fintech services, they can easily shop, make quick payments to their local grocery store, recharge cell phones, pay mobile and internet bills and paid subscriptions using QR code which is very convenient.
Fintech is shaping and forming the economy and people’s lives. It is taking care of several issues that were unavoidable earlier. Making cash transactions and carrying cash can be quite burdensome and risky. There is the fear of carrying large amounts of money and theft that ensues is just hectic and tragic. Fintech reduces fraud, which is not only limited to ordinary people but big institutions that are threatened by fraud day in and day out, rather risking more money.
Fintech has the capability to automate traditional financial activities in a significant way. For example, Fintech processes can automate verification processes entirely. Thus, making the whole communication process digital such as submitting documents online after which the verification and approval process can be completed within minutes. Even reducing paper documents to mere digital receipts which are much more organized and easier to retrieve. Customer care has demonstrated Fintech services best especially when users can easily sit at home and talk to call services and chatbots seamlessly in times of any inquiry or need. Such technology-led services make any sort of business steady in terms of operations and reduce risks of trial and error. A steady business will not only be beneficial to the company itself but also, improves customer satisfaction.
The future of Fintech is quite bright in the coming years because of its high acceptance rate. With the millennial and Z generation, Fintech and its related apps are appealing, and since they are mostly tech-savvy, we can expect avid fans of the emerging platform and industry. Fintech will eventually pave the way for the financial upliftment and the economy of any country.