Fintech and its applications
You must have felt the revolution taking place when you transferred money digitally for the very first time. Traditional banking had its own setbacks and disadvantages; the traditional banking establishments have been obstructed by legacy working systems, poor agile and technical advancements, lack of inspiration, and other matrices. Over the years, financial technology has evolved drastically on the global level, developing its roots robustly and making people adopt transforming modes of financial services through digital platforms such as “Fintech”. Fintech is a term used to refer to technology in the field of finance. Fintech companies provide their customers with widespread applications in financing via the means of trending technology.
Fintech is a technology that incorporates the use of software, tools, algorithms, and applications made for personal computers and mobiles. Fintech platforms are multitasking spaces to perform a variety of tasks such as depositing checks, money transfers, online bill payments, or managing other financial assets.
All the sectors are reaping the benefits of digitalization by adopting technology in their operations, management, and customer services. As the population is increasing, the demand for digitalization is also increasing with time which calls for developing user-friendly applications and software. Financial institutions are leaving behind their conventional methods of banking to adopt emerging tools in the fintech sector. The arrival of fintech has reshaped the approach of organisations to conduct business.
Fintech is a rapidly evolving segment of the financial services sector, which assists companies or startups in levelling up from the traditional ways of operating a business to digital financial services. From mobile payments to crypto exchange, plenty of options are available today to establish a commercial enterprise and expand its accessibility. Some of the applications of fintech are mentioned below-
One of the best examples of digital payments is the use of digital mobile wallets instead of credit and debit cards. Today, you don’t even have to go to a bank to make money transfers, it can be done at the ease of your home in a cost-effective manner, eliminating the need for a middleman.
Investment options allow people to preserve their assets and manage them in a single place which provides them the ease of handling their financial portfolios from anywhere and at any given time they want. With the help of data analysis tools, automation can be introduced in asset rebalancing and other related domains of asset management. One of the examples of fintech in investment is the use of cloud-based chatbots that assist users in asset management and investment.
We live in a world where we can apply for a loan with our mobile phones. Fintech companies attract customers with exciting offers such as data point collection, and better risk managing systems so that all kinds of populations can afford the fintech solutions. Users can review and request their credit reports at multiple instances throughout the year while not having to show their scores. Such policies make the process of lending money transparent, hence earning user’s trust.
Money trading applications enable a person with accessibility to the internet to make investments in the market, monitor the chances of risk in real-time, and share expertise in trading on the online platform itself.
With fintech, users have the freedom to manage their money online on their own. In order to provide a quick user-friendly banking experience, banks and start-ups are providing an option of generating online wallets and making user profiles, which in turn leads to the digitalization of the banking sector.
Insurance companies are in no way behind other sectors in adopting fintech services to provide a better customer experience. They let users acquire new services and make claims using their apps without having to follow hectic physical processes that were required earlier.
Resilience, Opportunity, And Innovations In Fintech
The global FinTech market grew significantly over the last few years. According to the Business Research Group, in 2018 the fintech global market was evaluated at about $127.66bn and is expected to reach $309.98bn in 2022, with an annual growth rate of 24.8%. However, after the arrival of COVID-19, experts and businesses have different opinions regarding the growth of the fintech sector. Fintech is no exception when it comes to being hit by the pandemic; this sector also faced a downfall due to lowered investments.
But the overall performance of a sector can not be measured on the basis of investment only. Fintech companies have shown their ability to survive market fluctuations by demonstrating resilience to the financial constraints they were facing. The main reasons behind their survival are the ability to work remotely, increased levels of equity finance, and incorporation of agile operations for improving customer service.
According to a report by Beauhurst, only 1% of the Fintechs were critically affected and only 2% were severely affected by the arrival of COVID-19. And the reason behind the mass adoption of fintech solutions was a shift in people’s behaviour which led them to use fintech apps for payments and transactions rather than traditional banking habits. This shift was based on COVID-19 restrictions which prevented people from going out and they were forced to maintain social distance. Lockdown might have had a negative impact on people’s lives but the fintech sector saw a surge in its users. Moreover, fintech companies are changing people’s way of banking by making them adopt digital banking that has comparatively cheaper, more efficient, and quicker solutions for people. It was evident way before the COVID-19 outbreak that fintech services will gain more popularity and adoption among people with time. During the pandemic, people were scared to make physical contacts which made them adopt digital financial platforms to eliminate the need to go out and make physical payments. However, the arrival of the pandemic boosted the performance and acceptance of technology in banking and other financial services. Banks and businesses are remodelling their way of working in accordance with increased digitalization. Also, well-established fintech companies worked towards upgrading their plans and infrastructures to meet the growing demands of the tech-savvy generation. Automation has played a major role in evolving fintech companies as giant financial tech businesses, they were ready to evolve as the situation demanded. Moreover, facing a crisis is nothing new to the fintech industry as it emerged after the biggest financial crisis in history, i.e. the great financial crisis of 2008. The fintech sector is all about emerging technologies and they know their way out of any crisis with the help of technology. No matter how many difficulties they faced during the pandemic, they emerged out of it with flying colours. Fintech companies in the future will target people that are not yet part of the global banking system. Fintech companies are planning to partner up with banks, the government, retailers, and other financial institutions. Doing so will help consumers as well as providers in easing the financing systems and also eliminate the gaps in traditional financing, while also developing a more transparent system of financing at a global level.
Digital finance is also expanding in other areas. Health concerns in the COVID-19 era have made physical cash payments less practical, opening the door to an increase in digital payments and e-wallets. Though cash use was predicted to decline in any case, COVID-19 hastened that decline, due to concerns that handing over money can cause human-to human transmission of the virus. According to a Mastercard survey looking at the implications of the coronavirus pandemic, 82 percent of respondents worldwide viewed contactless as the cleaner way to pay, and 74 percent said they will continue to use contactless payment post-pandemic. Also, fintech companies are working towards improving cybersecurity to prevent cyber crimes and impart their customers with a safe user experience. They are designing their products while being conscious of cybersecurity. We hope to see a more secure and digitalized world with the advent of fintech companies in almost all kinds of sectors.