What is Fintech and How Could Your Business Benefit from It?
Been hearing the word, ‘Fintech,’ a lot these days? Curious to know what it is? Here’s a quick guide to understanding fintech and how it can have a positive impact on your business.
What is Fintech?
Before we attempt to define fintech, we need to reflect on existing problems in the finance world. For one, people generally are intimidated by anything that has to do with financial transactions, records or taxes. It is a complicated world and people often shy away from anything to do with banks, mortgage or loans. That being said, we aren’t talking about your day-to-day banking problems (though they are annoying experiences). We’re talking about investments, capitals, tradings and other such financial processes that have serious implications for businesses and individuals. This is why very few people would actually step into the financial world and when they do, they are usually very meticulous about transactions, records, and financial management.
Short for, ‘financial technology,’ fintech is an emerging field with dedicated companies working to bring about smart, flexible, easy-to-use and people-friendly technology for managing finances. This could mean something as simple as mobile payments to something as complex as the digital version of a company’s financial data. Fintech is defined as, ‘using technology to improve the efficiency or delivery of financial services, at scale.’
What’s the takeaway in all this? Fintech attempts to simplify financial complexities and bring about benefits as cost-cutting, easy management, on-the-go financial activities and lastly, limited visits to banks and financial institutions. The idea being, making finances less intimidating.
How Does it Impact Your Business?
Whether you’re an individual or a business, you need efficient financial solutions. From being able to generate an online invoice to be able to send money to any country in the world through your mobile - the need for easy and efficient financial services is undeniable. With fintech, numerous problems will be resolved. People will be able to work remotely, purchase of commodities will be easier, security will be no longer be a problem and you can manage your finances right from your pocket. Some immediate benefits would be:
Crowdsourcing and Direct Pitches to Investors
The internet has truly turned the world into a global village. Unlike yesteryears where had no way of reaching investors with your great idea, crowdsourcing now turns the table. Investors can simply express their interest and people with the greatest idea can get directly in touch with investors. And how are finances managed? Well, the crowd-sourcing platforms like Kickstarter take care of it all! On the other hand, NGOs can benefit with crowdsourcing as people gather from around the world to fund a cause. One such example is WePay, which specializes in helping crowdsourcing platforms manage their finances and provides options for security checks and verification.
Cost-cutting and Efficient
Earlier, handling a remote team outside the country was difficult. Payment issues were a nightmare. Now, it’s easy as a breeze. With popular money transfer apps like Google Wallet, Facebook Pay, Transferwise etc, payment is no longer an issue. That’s a prime example of finance meeting technology empowering easy, efficient and quick money transfers.
Pre-screening Made Easy
Advanced AI robotics can derive a person’s online history, analyze their financial behaviors and advise them with the best investment plan option. Similarly, the same process can be used by banks and financial institutions to give the best plans to users. There is no involvement of manual labor apart and the entire process from choosing a loan to getting one and managing it becomes an automated affair.
E-commerce and Shopping Made Easy
The benefit of fintech to retailing is undeniable. Whether you’re the seller or the buyer, with automated payment systems like Google Wallet or NFC, you get all the required information as needed without any additional hassle. Small and medium businesses, as well as online retail stores, can benefit from fintech as money can now move between borders all the while being manageable and traceable.
Fintech is growing fast. A report by Fintech Finance states that there are 1,362 Fintech companies in 54 countries around the world. To date, fintech firms have received up to \$36billion investment to date. Ironically, banks aren’t taking fintech firms seriously because they are under the impression that people are not ready to leave old ways. However, with the rapid pace of technology and the ease of online banking, finances, business etc, there is a change in consumer behavior. It will not be long before people may give up banking and probably go cashless.