What is Fintech?
Financial Technology, or Fintech, can be best described as the use of advanced technology and software to provide financial services to clients and businesses. These services can range from authenticating and facilitating mobile payments, online banking, investments, and in the more recent days, trading of cryptocurrency.
Businesses use this technology to enhance the efficiency of their transactions, and/or automate them. Fintech has also made financial services more accessible to the general public. Everything from the traditional tasks related to the field of finance like investing and payments, to the more modern ones like cryptocurrency and blockchain, is facilitated by the Fintech firms.
The finance industry has gone from using basic technology like ATMs and Debit/Credit cards to the advanced technology that the current Fintech applications are based on. According to a study by the IT-giant Accenture, global investments in the Fintech market shot up from $4.05 billion in 2013 to more than $12.2 billion in 2014, with Europe being the fastest growing region in the world. Fintech caters not only to financial institutions and the people connected to them, but also to the people who do not have bank accounts.
It targets to reach $2 billion such people globally, making financial services accessible to them without the dependency on a financial institution. Whether or not you are aware of the nomenclature of such apps is a different thing, but if you use your smartphone for financial transactions, you would have definitely used any of the fintech apps for those purposes. These apps are developed by a dedicated team in fintech app development companies, who are specialized in fintech apps.
Examples of Fintech Apps
Mobile Payments – In the present times, mobile payments have become an integral part of the usage of any smartphone. A lot of companies have come up with applications that let consumers make payments and do transactions on their mobile devices. Some examples of such apps are PayPal, Venmo, Google Pay, etc.
Insurance – Insurance Technology, or Insurtech, as it is now called, is another part of Fintech that has been made convenient and user-friendly because of the usage of smartphone applications.
Crowdfunding Platforms – Patreon is something that most, if not all, smartphone users would have heard of. You see creators and artists seeking your support through Patreon through various media. Such platforms allow users to send and receive money from other users of the same platform and have also allowed individuals and businesses to gather funds from various different sources in the same place. Thanks to such apps, it is now possible to directly go to investors to request their support in one’s project or start-up.
Investment Management – Ask the investors how easy their lives have been made because of the advent of these apps that allow traders to buy, sell, and trade stocks on their mobile devices. Not only this but these apps can also be used for investing in cryptocurrency and blockchain, the recent phenomenon.
Importance and Benefits of Fintech Apps
- Cost Effective – It is one innovation that comes with a reduction in cost for both the users and the businesses. Salaries, rent, and advertising are some of the major cost-cutting factors of these apps since they don’t really require these things, unlike the more traditional forms of firms that do. This cost-cutting enables businesses to invest more in their clients.
The automation of transactions makes sure that less physical presence is required, which further lowers the cost of the services provided to the customers. One more important fact that leads to cost-effectiveness is the integration of multiple accounts and/or cards in a single interface. This ability empowers both the businesses and customers with easier transaction methods, thereby further reducing the overall costs.
- Supremely Convenient – Mobile connectivity and the internet have helped us in many ways, with Fintech being an important part of that list. These Fintech apps ensure the convenience of transactions, combined with the enhancement in efficiency. This leads to a better experience for the customers, with increased transparency and greater availability of information to the users.
Fintech apps make sure that the information the consumer is seeking, is available to them at their fingertips. The biggest benefit of convenience that Fintech apps provide is the ability to make financial transactions possible for people who do not have bank accounts. By catering to every single person in the world who has a smartphone but does not have a bank account, these services have become truly global.
- Safe and Secure – There are many people who still think that Fintech apps are not secure enough to be relied upon. This could not be farther from the truth, as Fintech is quite safe as compared to traditional banking. Cybersecurity measures put on these apps are stringent and very effective, unlike the ones that are used by traditional banks.
Other than being slow, those systems are not very effective either, as it has been found in surveys that larger institutions do not focus so much on technology as opposed to the Fintech firms that do. Traditional banks are diverse in their work, which makes it difficult for them to be focused on the technological aspect of things. On the other hand, it is easier for Fintech apps and companies to adopt cybersecurity measures as the foundation of their work is based on technology.
- Faster Approvals – Online or digital lenders and financial service providers can now go through multiple applications and approval processes in one single day because of the advancements of Fintech. Customers these days demand instant services, and to cater to such demands, the use of technology becomes absolutely essential. For example, if one is looking for a short-term loan or a payday loan; there are multiple companies ready to offer very little turnaround time for these services.
The demand is considerably high and the use of good Fintech apps helps one quicken the decision-making process. The use of Artificial Intelligence in the automation process powers customer interactions to such an extent that 95% of all these interactions have become significantly better as compared to the previous decade. This is because many of the customers prefer to deal with machines over humans.
As is evident from the multiple benefits mentioned above, and also the speed at which technology and smartphones are reaching every single hand in the world, Fintech apps are all set to be the future of financial transactions. Further advancements in Fintech are expected to ensure a greater number and variety of tasks that can be performed by these apps. As humans continue to strive towards making life more convenient and transactions more secure, the importance of Fintech apps is only going to increase in the times to come.
Binary Blogger has spent 20 years in the Information Security space currently providing security solutions and evangelism to clients. From early web application programming, system administration, senior management to enterprise consulting I provide practical security analysis and solutions to help companies and individuals figure out HOW to be secure every day.