FinTech: 5 Guidelines to Using Financial Technology
Everyone will be exposed to at least one type of financial service during their lifetime whether it’s daily banking, applying for a loan or insurance coverage. The financial technology industry, fintech for short, is relatively new to the world.
It has improved our access and usage of financial services dramatically. A notable fact about fintech is the rapid changes in technology used as a part of financial services has resulted in even more rapid business operation changes and growth.
1. What is Fintech?
Fintech is the term used to describe technology that is used to improve financial services, such as banking and investing activities. Virtually any product or service that combines technology and financial services is classified as fintech. With the advancements in the general technology industry, there are many fintech solutions out there today for individuals and businesses, as you can probably imagine!
2. Fintech Types
The most commonly used forms of fintech today are mobile banking and online financial lending services. Mobile banking apps have completely changed the way money is transferred, investing activities are carried out and how bills are paid for both individuals and companies. In the future, financial service technology incorporated with cell phones will advance much further due to the convenience and simplicity of the existing fintech that consumers are continuing to demand.
Companies looking for financing under $300,000 can now easily attain the funds they need by applying online. It only takes about one day for a company to have their loan deposited into their bank account. This has been a revolutionary service for small businesses who have had challenges obtaining financing in the past due to rigid regulations of banks.
3. Impacted Industries
A number of industries have been impacted by financial technology. The banking, insurance, accounting, risk management, borrowing, lending and trading industries have all been affected, merely to name a few. Technology has improved the products and services these industries provide by making the products and services more accessible and user friendly.
Businesses within any industry using these types financial services have also been impacted because the way they attain financing, bank and use any other financial services has changed for the better. Small businesses accessing online loans have been impacted significantly, particularly, restaurants, coffee shops, fitness clubs and construction businesses.
4. Who Uses Fintech?
Today, nearly everyone uses financial technology due to the efficiency and accessibility of cell phones and internet. With financial services available at the touch of your fingertips, people can register for financial services and receive or disperse funds at any time and place.
Small businesses looking for fast financing for working capital and growth needs are one of the newest common users of fintech since financing is now available online with many major banks. In the past, it was difficult for small companies to get the financing they needed because of their non-traditional business structures and lack of assets to secure loans.
5. Limitations of Fintech
Unfortunately, the automation of financial services has resulted in some people losing their jobs. In addition, it has made banking and other financial services challenging for individuals or companies that are not technologically savvy.
For those that demand more fintech, financial service businesses are continuously looking for new technologies to incorporate into their services, however, they are limited by security and monetary resources.
A drawback to fintech is the lost interpersonal connection that has historically been used in financial services. Prior to mass technology, a sales representative would assist clients with their needs as they navigated their way to fulfil their financial goals. Today, financial information and assistance will have to be researched by the individual themselves which can make the process more daunting.