Fintech stands for financial technology which in broader sense means the use of technology by financial firms for their services. This is not a buzzword anymore as it has entered a phase where small to larger businesses need to embrace this technology in order to compete with emerging innovative Fintech firms. It is disrupting financial services such as mobile banking, Lending, Wealth management and International money transfer. We will discuss Fintech with examples which will help you more in knowing about How Fintech is Disrupting Financial Industry.
How Fintech Works
Fintech startups use innovative technology for disrupting services offered by traditional financial institutions. Thanks to technology, the services are offered with efficient, cost effective and more convenient manner. For instance if you were to make an international money transfer; it would take a lot of time to transfer your money and will also cost you a high transaction fee. But Fintech firms like Ripple not only transfers that money in seconds but the fee also amounts to excitingly low figures.
Fintech Firms Provide Alternative to Banking, Insurance & Lending Services
Fintech is Changing Business and Consumers
Many Fintech startups have emerged with their unique products and services. Their services are changing the behavior of consumers and small businesses altogether. Fintech startups actually provide alternative to the services offered by sectors like banks, financial advisers and insurance. For example taking a loan from bank requires a long time for credit approvals and credit history. But Fintech eliminates the need of hefty credit history and provides services like crowd funding and virtual investments, making it easier to avail and limiting the time from months to weeks. With crowd funding, it is now actually easier for small businesses to collect capital fund and that too from international investors.
Because of Fintech, it is now convenient for consumers to use financial services in their daily life. With such as digital payment service, you can make transactions more conveniently and let alone more safely. Anyone sitting anywhere in the world can easily make payments using digital payment services. Businesses small or large will need to embrace Fintech as to meet the expectations of their consumers.Let’s discuss briefly how Fintech is changing each sector of financial Industry.
How Fintech is Disrupting Financial Industry
Banking sector is affected the most because of Fintech offering innovative digital payment services, easier and faster international money transfer service and crowd funding services. Consumer bank; which is alternative to traditional banks, is also a product of Fintech, which can be used to store digital money and for digital payment services. Fintech firms have also simplified getting the loan service for small businesses. These services help small business to start efficiently and grow globally much easier than with the services they used to get from traditional banks. Technology like Blockchain is making it possible for Fintech firms to transfer money faster than ever.
Payment sector is the most exciting sector and the second most to be disrupted by Fintech. All the transactions are going to be cashless and even without the use of debit or credit cards. It is going to be possible with digital wallets and with the increased use of digital devices. As the use of such platform increases, it helps Fintech startups to integrate their products and services at B2C business sector.
Read Also: Understanding Fintech Ecosystem
Asset management is believed to be the third most affected sector by Fintech. With services like Cloud and Big data, Fintech have made it easier for businesses to analyze their assets and investments. Cloud has helped businesses to reduce their operational cost and move their data to cloud. It has also enabled new businesses for smooth entry by reducing the need of heavy seed capital. Big data gives the power to every business with their comprehensive tools to analyze heavy load of complex. No matter how complex or exclusive the data is, the users can now access and analyze the data on their simple smartphones.
In this sector Fintech is helping the individual consumer a lot. Fintech helps in eliminating the time taken to minimum for processing of insurance claim. For example there are apps designed by insurance Fintech firms which can approve the claim in seconds and process the claim amount to your digital account right away. Insurance Fintech firms have also managed to serve under-insurance consumer base which were not entitled for insurance by the traditional insurance companies. In short insurance Fintech firms are exploiting the gaps and are using innovative technologies for their services.
So to sum it up it is necessary for both financial institutions as well as the businesses that are involved with them, to adapt to Fintech. Financial industry is rapidly changing because of Fintech and it is now important for businesses to adapt to these changes. Many businesses will need to collaborate with Fintech firms in order to compete or else lose their consumers and finally their businesses. The Fintech revolution is imminent.