FinTech: A Digital Revolution In The World of Finance
Only people indifferent to finance might not have noticed the significant changes the industry is undergoing.
Smart apps allow users to pay for purchases, transfer money, view an account balance statement, deposit and withdraw funds, get loans, etc.
All this can be done in the blink of an eye thanks to the FinTech boom.
What is FinTech?
Since the 1950s every ten years have been marked by an innovation disrupting the financial market such as credit cards, ATMs, electronic trading, e-commerce, cryptocurrency, etc.
All the above-mentioned is a result of tremendous efforts made by IT companies that have established the whole industry called FinTech.
The large FinTech infrastructure may not be evident for ordinary users taking all its perks for granted.
At the same time, the development of FinTech has dramatically contributed to facilitating the activity of go-betweens by improving their risk and trade management systems, designing research tools, enhancing data analysis and processing.
Surprisingly, large banks have not suffered from the boost of FinTech, quite the contrary.
Respectable and conservative banks (e.g., Citigroup and Goldman Sachs) have been applying cool financial inventions for long.
Among them are online payment apps, digital wallets, digital helpers, crowdfunding and p2p lending plans.
What makes FinTech so successful for institutions and clients?
1. Innovativeness
While the priority of bank and insurance business is to remain stable and use a middle-of-the-road approach, creative startups strive to deliver unconventional solutions.
Their proposals are bespoke and tailored for a specific purpose.
On top of that, innovators manage to develop the best systems in a short period and at a minimum cost. financial application development
FinTech companies are not only innovative regarding technology but also employ forward-looking business models.
Although some of these novations (mobile-first apps and websites, non-traditional data sources) raise a high number of concerns, one can hardly deny their popularity.
2. Customer-centricity
The traditional financial framework lacks simplicity, convenience, and optimal user experience.
Banks’ official websites and mobile apps are usually flooded with text information and are extremely hard to navigate.
In contrast to them, fintech projects follow cutting-edge trends in UI/UX and are aimed at engaging users.
3. Simplicity
Along with the maximum focus on clients, FinTech companies seek optimal ways to address customer issues.
Intuitive and easy-to-use products are based on a combo of high technologies, advanced business models and a sophisticated approach.
Clear and simple solutions deployed in financial application development attract more customers and increase the level of their satisfaction.
4. Lack of legislation
Given that there are no strict laws and rules for fintech innovators to enter the industry, they tend to use an asset-light business model.
Even though assets are for financial safety and security, they require constant maintenance.
An asset-light model helps firms to increase their value by using fewer resources in comparison with the scope of their activity.
This model is also of great help when it comes to kick-starting a new project fast and cost-effectively.
There is a generally accepted opinion that fintech enthusiasts always search for the way around when they need to meet the requirements.
However, the set of rules on business registration recently imposed by regulators has made startups take notice and do their best to get licensed.
Why Is Fintech Important For Business
Small-business owners feel the support of FinTech more than anyone else.
Fintechs provide firms with everything they can’t get from financial service providers, e.g., seed capital, loans, financial advice, digital financial solutions, online services and many more.
While other financial brokers are targeted at big business, fintech companies mostly work with small-scale entrepreneurs.
With the helping hand of FinTech small companies can gain a share of both the online and offline market, increase the customer base and achieve ambitious business goals.
This is what FinTech is changing small business through:
1. Fundraising
Crowdfunding platforms have successfully filled the gap of financing brand-new projects through sponsorship and donations.
No matter whether you’re going to open a beauty salon or to set up an accounting firm, you can go to a crowdfunding website and take part in a fundraising campaign.
P2P loans are very similar to crowdfunding, yet they have the lending process at their core.
Just like various crowdfunding portals, there is a good number of p2p lending websites where backers can help those in need to receive investments.
2. Accounting
Monitoring expenses and invoices are essential for business owners.
Today it is easier than ever.
One can use special apps with free online solutions which simplify the accounting and payroll procedures.
A business owner neither needs to be tech-savvy, nor to get deep into accounting.
Interfaces are intuitive, which reduces the likelihood of misunderstanding.
3. Financial assistance
With a plethora of financial enterprises appearing every year, dealing with finances is becoming easier and easier.
One possible example could be rental service providers allowing property owners to receive rental payments, accept cards, give loans, bare move-in costs and attract renters online.
However, it’s not fair to say that large corporations do not reap the benefits of advanced technologies.
In general, technological startups provide businesses with higher speed and better accessibility.
Virtual teams, the web, and mobile communication, advanced data analysis methods, cool fintech applications give business people complete freedom.
Today there is no need to spend a tremendous amount of money on buying and installing complex software.
In the past, businesses would pay a pretty penny for hiring an IT team to maintain financial software.
Unlike it was decades ago, today business owners can take advantage of constant information updates to make informed decisions and develop strong marketing campaigns.
Moreover, these factors help corporations to reach more clients and offer improved goods and services.
With access to real-time information and the widespread use of smartphones, clients can make transactions, replenish their accounts and control the balance on their accounts immediately.
However, the biggest advantage of FinTech is advanced analytical tools.
Having vast amounts of information on clients’ buying habits, supply and demand ratio, market prices and competitors’ activity, large corporations can build business models on a fly.
Bottomline
What is the future of FinTech?
FinTech is meant to disrupt the marketplace, and it is pretty hard to say what the financial landscape will look like in a few years.
As the financial sector is strictly regulated, the fintech startups failing in complying with the requirements risk being discarded.
So, what shall they do?
A possible way out may be to form alliances with other financial companies and find the areas for collaboration.
This, in turn, will lead to better clients’ experience, lower administrative costs and higher profits for all the participants.
Also, it is vital to identify weaknesses and strengths to understand the needs of clientele better.
It will foster the development of the whole financial industry.
