Have you heard of Fintech? If hearing that word made you say, “What is Fintech? Is that some sort of new startup or strange Hollywood movie about finance moguls?” you really need to read this article. You will learn about the ways in which technology is marrying traditional finance to create methods of payment, money transfer, and buying goods and services that are revolutionary and transcend borders. All of this and more is discussed in this article, so read further to learn more!
What is Fintech?
Google the phrase, “what is Fintech?” and you will literally be greeted by hundreds, if not thousands of articles that read like this. “Fintech is a short word that describes Financial Technology. Fintech combines traditional finance with the newest technologies to create technological applications and methods that automate the ways in which people, businesses, and other entities use and deliver money and other financial services.
Since Fintech is new (it began in the 21st century, people tend to associate it with tech startup companies, but it is much more extensive than this. It is already revolutionizing the ways in which people are paid, send money, buy things, and invest. A good example of Fintech in terms of payment is mobile payment apps. Some of the more popular ones are PayPal and Paytm. But Fintech is also useful in crowdfunding which is traditional fundraising that is done through online platforms like Kickstarter and GoFundMe.
Why is Fintech so important?
Well, Fintech is so important because it is penetrating every aspect of peoples’ daily life and is expected to become even more popular and pervasive in the future. The numbers speak for themselves. According to a recent report released by Accenture, Global Investment in Fintech increased dramatically from $930 in 2008 to more than $12 billion in the first quarter of 2015. The increase has been even more dramatic in Europe which saw a 215% increase in investment to a record of $1.48 billion in 2014.
It is clear that Fintech is here to stay and is becoming an increasingly popular way to accept and make to interact with money and make financial transactions globally. Firms like the Money Tree and Edwards Jones are finding that apps are an easy way to lend money, help people manage their assets, make investments, and save money!
How are governments responding to Fintech?
Well, governments are seeing just how important Fintech is to the general public and the ways in which it makes their financial lives much easier and more convenient. They are passing regulations that will govern the ways in which Fintech can operate within, between, and across borders, and they are passing laws that will make it easier for people to use Fintech in their daily lives. Examples include LIBOR and MI Fid which are designed to discourage the overuse of Fintech and regulate it at the same time.
This is especially evident in London, England. There, the London City government is recognizing just how important a role Fintech is playing in terms of shaping its current economy and its economic future. For example, its government is passing laws that are encouraging Fintech businesses to relocate to London, and more people to study Fintech and work in this sector. The results speak for themselves because it’s been Fintech and related investment which has mainly been responsible for pulling London out of its current recession and saving it from the financial chaos that has plagued most of the European Union. The recent statistics state that 40% of the metro’s population works in the Fintech and related sectors.
How Fintech is revolutionizing business
Mobile and other technologies have changed the way businesses operate in terms of monetary transactions forever! The Internet operates on traditional laptop and desktop computers and on digital (mobile) devices, and since most people do business online through their mobile devices, new apps like Stripe and Square are changing the ways in which businesses can accept payments, make payments, and transfer money.
The Internet has made it easier for online crowdfunding platforms to emerge and this is giving business owners access to amounts of capital in ways never imaginable before. Gone are the days when they had to approach traditional investors or banks, make pitches, fill out lengthy loan forms and applications, speak to investors and bank reps and hope for the best. They can now go to platforms like IndieGoGo and pitch their business ideas and proposals to the global audience. If these ideas and proposals are good and viable, they can look forward to hundreds, if not thousands of dollars deposited into their crowdfunding accounts in less than a week. Therefore, they can obtain vital ‘seed money’ from complete strangers!
Money transfer issues have traditionally complicated business operations because many businesses (even small operations) are now global. In the past, the only real option they had for money transfer was Western Union which was lengthy, arduous, and did not always guarantee money transfer. Now, they can use Xoom, Zelle, GPay, OFX, and MoneyGram. The best part is that many of these money transfer services do not charge a transfer fee.
Fintech is helping customers
Because people are always, ‘on the go,’ they engage in all financial transactions – from making purchases to saving money on apps on their smartphones. They can use apps to make purchases from companies that do not accept traditional credit card transactions – either in person or online. All they have to do is click on a few buttons for the money to be deposited in the vendor’s account.
Fintech makes finances easier
Fintech makes finances (business or personal) easier by introducing various apps and online services that make sending, saving, transferring money, and making purchases easy to do with the click of a few buttons.