What is Fintech and Why Should You Care?
At its core, Financial Technology (Fintech) is a new technology that seeks to improve and automate the financial services sector. Fintech helps organizations and individuals to better manage their financial processes, operations and lives using special computer and smartphone applications.
The term “Fintech” was coined in the 21st Century, and it describes any form of innovation, including business transaction tools, double-entry software and virtual currencies such as crypto. Over time, the coverage of what comprises Fintech has broadened to include tools for depositing money or checks via mobile, money transfers, by-passing banks to apply for credit digitally, managing investment portfolios, raising cash for start-ups without involving a person.
As you’d imagine, this tech has become part of our everyday lives, mainly in the era of remote working and social distancing. But beyond that, there’s a lot more to benefit from Fintech, with or without the pandemic.
So, as a business or an individual, why should you care about Fintech?
Why is Fintech Important to You?
1. Fintech is cost-effective.
Fintech apps are more affordable compared to commercial and retail banks. According to a recent post by Forbes, while banks own digital transacting platforms for depositing, transferring and withdrawing money, they’re “not the cutting edge of customer-friendly technology and they are still dependent on the fees they charge.”
Fintech firms have made affordability one of their core strengths, and unless the retail and corporate banks restructure their costs, they could be outmuscled by the “younger” innovators.
2. It creates financial inclusion.
Fintech is accessible anywhere by anyone. Meaning, the people that never utilized banks for one reason or the other can now have a convenient financial platform. Continents such as Asia and Africa are the biggest beneficiaries of Fintech, with mobile money transactions leading the way. Through such innovation, Fintech is helping the masses transact from the comfort of their homes, thus creating a financially inclusive world.
A study by EY established that 46% of SMEs use a Fintech-based financing service while another 56% use a Fintech tool for banking and payments. The survey reached 27,000+ consumers across six continents.
3. It offers higher security.
The question of the safety of Fintech platforms has been argued for years now. However, in essence, Fintech is more secure than physical financial institutions. Traditional banks tend to use the same old security systems, including locks and keys, which, to be quite honest, are stone age and may not work as effectively today.
Apart from that, brick-and-mortar institutions are hardly ever fast when it comes to adopting cybersecurity measures. Fintech platforms, on the other hand, are built on tech with security measures as primary goals, making them quite formidable in protecting user data or assets.
There are many other reasons why Fintech should be your go-to tool if you’re looking to survive the semantic web. However, we hope these three will offer you a starting point on your journey to learning more about what this tech can offer you.
That’s it for now. And as always, be sure to send any questions our way, and we’ll do our best to help.
Until then, stay safe and keep learning!
Read next: The Future of Digital Banking in the US