With every new trend there are a number of new buzz words and even more people pretending to know everything about it. But especially when it comes to complex topics like finance and technology, it can be easy to confuse things or not fully understanding the mechanics and impact it has. Financial Technology aka FinTech is such a particular case, so maybe it’s time to get back to the basics. A brief summary of what it is and what FinTech does in terms of how businesses operate.
What is FinTech?
Financial Technology, popularly known as FinTech, is a new aspect of technology that has come to disrupt the conventional ways of carrying out business and financial transactions.
It is not only limited to how people carry out business dealings, but also financial intelligence, account keeping, and even digital money.
However, FinTech is not a new phenomenon as it has been around for a while. It became more prominent after the global financial crisis of 2008. Since then, it has taken shape and developed into disrupting how businesses are done; rebrand payment methods, insurance services and others.
Also, smartphones have proved to be one of the most significant technological gains since its inception. It has altered the way consumers think, pay for goods or demand for advisory service. FinTech makes everything easy, so here is how FinTech is disrupting how businesses are done:
Sourcing for capital
The FinTech firms have provided an alternative borrowing route for small business owners at a relatively low-interest rate. Before, a lot of lending institutions found it difficult to give out loans to startup owners without collateral or especially one that has a low credit score. But thanks to the introduction of new models by FinTech companies, loans are now readily available to start and grow your business at more competitive interest rates.
Improved financial management
As a startup or small business owner, after going through the pains of sourcing for capital and growing a business, the last thing you want to happen is seeing the business crumble because of financial mismanagement.
FinTech is changing the narratives when it comes to managing your finances productively. There are simple ways to track your spending and make more informed decisions. The world has moved on from the traditional method of note-taking in managing finances into more digitized ways.
It has eased payment of goods or services
FinTech has made payment of products and services more accessible than before. Gone are those days when people queue up to make payment. Also, FinTech firms impact on logistics or transportation (think Uber and others) has made it so easy to make a payment from the comfort of your home before doing anything.
It helps overcome competition
A business owner leveraging on FinTech will definitely have an advantage over others who don’t in terms of agility and resources, but also in terms of appeal. Customers are naturally drawn to change and new offerings and with more and more generations growing up in a world dominated by smartphones and tablets, the risk to be miss out or be left behind simply increases for businesses that do not join the digital revolution.
It helps to discover hidden opportunities.
FinTech has opened a whole lot of business opportunities for innovative entrepreneurs in areas otherwise deemed risky or inconsequential. Apart from building these businesses, the entrepreneurs also expand their base into new areas and gain market share where previously prospects weren’t accessible.
Conclusion
The global rise of FinTech has helped a lot of innovators identify different small business opportunities and improve the way business transactions are carried out. Businesses now get far more return on investment through the use of innovative and straightforward FinTech processes. While this development has already impacted many aspects of business processes, creative business owners ought to keep track of changes in the FinTech industry as they will be able to discover different ways they can improve their businesses and stay ahead of the competition.
What next?
If you want to know more about FinTech, check out our dedicated section or download or eBook #FinTech – An introduction to the different sectors, innovative technologies and hashtags that transform the financial industry.