Can you name one of the biggest revolutions that happened to date in the financial world? Without a shadow of a doubt, it’s Fintech! Today, the financial industry is at its peak, and technology seems to be evolving at a faster pace.
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Looking at the present scenario, COVID-19 has become an unexpected catalyst for tech adoption globally. In addition, online activities and transactions are no longer a matter of convenience but a mere necessity. With more and more people adopting a digital lifestyle, they have also started to expect the same convenience and seamless experience from other areas of life, including financial services. Anticipations are that the Fintech domain is to play a very crucial role in a post-COVID-19 world.
According to a blog published at TatvaSoft, Fintech means financial technology. The new tech is all about improving and automating the delivery and extreme use of financial services. More or less, Fintech is used to help companies, business owners and consumers better manage their financial operations, processes, and lives by utilizing specialized software and algorithms that are used on computers and, increasingly, smartphones. Fintech, the word, is a combination of “financial technology.
In a broader perspective, financial technology is something that can be applied to any innovation in how people transact business, from the invention of digital money to double-entry bookkeeping. Since the beginning of the internet, the mobile revolution and digitalization have grown explosively, and fintech, which originally referred to computer technology applied to the back office of banks or trading firms, now describes a broad variety of technological interventions into personal and commercial finance.
Through time, FinTech shifted towards consumer-oriented services and now includes different sectors and industries such as retail banking, education, fundraising, nonprofit and many more.
Importance of Fintech
The power of the internet cannot be underestimated at any rate. Due to which financial services have never been more accessible. Today, it doesn’t matter whether your company is offering services in its reach or not because all you need is a WI-FI to enter the Fintech world to enhance your business.
Also, in comparison to corporate and retail banks, solutions offered by fintech are way cheaper. Donna Fuscaldo, a FinTech and cryptocurrency journalist at Forbes, has stated that although traditional banks have online services for accessing accounts and transferring money they “aren’t on the cutting edge of customer-friendly technology and they are still dependent on the fees they charge.”
Another aspect of fintech is its amazing security. In fact, it has proved that in many cases, it turns out to be way safer than traditional banking. Unfortunately, earlier traditional banks were pretty slow when it came to adopting cybersecurity measures. With fintech becoming the base of any and every business today; cybercriminals no longer find it easy to penetrate in.
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On and all, FinTech offers solutions in which all businesses can have enormous benefits. In any general scenario, small to medium-size enterprises require economic growth more than well-established companies. And what happens is they keep on facing difficulty while securing the financing they need to flourish.
Innovative FinTech products are efficient and effective and give SMEs access to a variety of rich funding options.
These options are tailored to the needs of small businesses and include marketplace (peer‑to‑peer) lending, merchant and e-commerce finance, invoice finance, online supply chain finance and online trade finance.
To sum up, fintech has been since 1950! Yeah, you read it right! And slowly and steadily the growing technology has become a crucial part of our day to day lives.
The Fintech Landscape!
When combined with new technologies like machine learning, artificial intelligence, predictive/behavioural analysis, data-driven marketing – fintech leads to significant transformation in thinking, processes, decision-making, and even overall corporate structure. Not only this but by using chatbots and AI interfaces, the concept not just businesses but does even assists their customers with basic task and also keep down staffing costs.
According to sources, Fintech startups received $17.4 billion in funding in 2016 and were on pace to surpass that sum as of late 2017, according to CB Insights, which counted 26 fintech unicorns globally valued at $83.8 billion. The same firm reported that there were 39 VC-backed fintech unicorns worth $147.37 billion by the end of 2018.
Some of the best fintech activities include:
- Cryptocurrency and digital cash
- Blockchain technology, including Ethereum, a distributed ledger technology (DLT) that maintain records on a network of computers, but has no central ledger.
- Smart contracts, which utilize computer programs (often utilizing the blockchain) to automatically execute contracts between buyers and sellers.
- Rise the concept of open banking
- Insurtech to simplify and streamline the insurance industry
- Unbanked/underbanked, services that seek to serve disadvantaged or low-income individuals who are ignored or underserved by traditional banks or mainstream financial services companies.
- Cybersecurity, given the proliferation of cybercrime and the decentralized storage of data, cybersecurity and fintech are intertwined.
Ways to use fintech software boost your business
So, I am going to ask you again – Which is the most important industry right now? Fintech offers a wide range of benefits such as increased access to financial products and services, speed and convenience. Additionally, FinTech has made managing a business easier – for both small and large entities.
If you haven’t already made the move to adopt FinTech software and services into your business, and are unsure as to why this would benefit you in the long run, here are 5 ways FinTech can improve your business.
1. Payment Processing
After the COVID-19 hit! It has been observed that around 90% of customers especially the retail ones prefer making payments with plastic. According to a 2017 report by the Federal Reserve, 61 percent of Americans prefer to pay with debit cards or credit cards at local stores. Other digital forms of payment, like mobile wallets, are also emerging to provide customers with alternatives to paying in cash.
To make more transactions, small businesses must expand to expect debit and credit cards and even mobile wallet payments. For many small businesses, the bulky point-of-sale machines doesn’t make sense to purchase and install. Mobile businesses especially, from food trucks to pop-up clothing stores, require easy-to-transport payment processors. Fintech to the rescue.
All thanks to square, Paypal, PayAnywhere – the mobile processing solutions and plug-and-play options like tiny credit card readers.
2. Digital Lending
Have you ever come across the terms microbusinesses and microloans? Well, if you are an entrepreneur then I am sure you must have faced difficulty in facing or dealing with traditional financial institutions for getting a personal loan for businessmen.
Micro and small businesses have always played an important role in the rise of the economy. Ironically, traditional financial institutions are not very big on lending to them because the amounts they require are small and their activities are inconsistent.
Fintech solutions or services does end up assisting businesses of all sizes by simply bridging the unseen gap between the banks and the business with technology. Fintech innovations have eliminated inconveniences by making the lending process a lot easier. The personal loan process is online, instant, paperless, and convenient.
3. Access funding and support growth
Can you name me what’s the most crucial factor required for any business to grow? It’s the cash flow! And you being an entrepreneur must be having several important things to worry about – people, products, services but eventually everything is related to cash.
Business expansion in other words is you are looking for different ways to strain cash. Somehow you almost always need to incur expenses and make investments before achieving the higher revenue and cash flow that comes with successful growth. Fintech has made it possible for businesses to obtain the funding they need through online lending which is simple and fast with easier application experiences than possible through traditional financial institutions. Crowdfunding, for example, allows you to get funds quickly and efficiently from people that you have never met.
Fintech companies provide the technology and transparency that banks don’t have. When you have access to cash flow you can move fast and exploit opportunities quicker than your competition.
4. Track Expenses and Monitor Cash Flow
Only having ample cash is just not it one must know how to track expenses and keep their tabs on the cash flow. Try to come up with an accounting system that monitors their cash flow in real-time to ensure that their business is running smoothly. Quite a few FinTech companies have introduced expenses and invoices apps for small businesses. These apps are free, and you don’t need to have advanced IT skills and accounting knowledge to use these apps.
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5. Automating Accounting
Having a clear understanding of your finances does provide great help in better decision-making especially in regards to when and where to invest your money. whether a loan is a smart move, and if you can afford your next hire. Despite all this, almost half of small businesses don’t have a bookkeeper or accountant. Fintech applications are rising up to help fill some of these gaps. And while they can’t wholesale replace the expertise of a real-life professional, they can streamline the finance workload.
Keep looking around for reputable fintech service providers who offer software that manages invoices, accounts payable, payroll, expenses, and even cash flow forecasting.
So this is it for now! However, you will come across numerous options all at once that might not just increase your expenses but also difficult for your teammates to utilize it to its full potential.
Instead, evaluate your top business priorities and look for relevant fintech solutions. For example, if managing cash flow has been a long-time issue, explore fintech apps that designed to offer more finance visibility and cash flow forecasting. Or if a retirement plan has been on your to-do list, look at fintech companies that have made the benefits more affordable.
Technology continues to level the playing field for small businesses. Take the time to assess how fintech can address needs in your own business and then leverage the innovation to your advantage.