What Is Fintech and How It Remains Vital To Today’s Economy?
Financial technology is the innovation and technology that seeks to replace traditional financial procedures in the provision of financial services to individuals. It is also an emerging market that makes use of new technologies to enhance financial activities. This technology is used to make financial instruments more reliable, efficient, effective, and convenient to deal with. As the use of technology increases in other areas, we can expect many positive results in financial markets.
There are many advantages brought by new technologies in providing financial services. One of the notable advantages of using fintech is that it helps in improving efficiency. By combining computers and financial tools, financial service providers can perform calculations much faster and more accurately. Another advantage of fintech is that it helps reduce cost as there are no complex procedures involved.
Many people are not aware of the fact that until a few decades back, banks were considered to be the most important players in the financial services sector. However, the recent recession has changed all that. Fintech companies emerged after the devastating impact of the financial crisis on traditional banking. The need for new technological advances and tools led to the emergence of fintech companies. Apart from traditional banking, fintech companies are now focusing on developing online banking solutions and automated teller machine systems. These innovative financial processes help in reducing the cost and handling complexities of paper work.
Today, banks are adopting the fintech model by providing the customers with online access to their accounts and services, without opening an offline branch. Online banking systems are increasingly making use of internet technologies. Internet based software programs help banks and other financial institutions cut their IT spend. They are able to trim down their operating budgets by utilizing online banking services provided by fintech companies. Online banking systems and software programs are now more convenient and customer friendly than ever before.
The most prominent advantage of investing in fintech companies is that they can provide customized solutions to customers. Traditional banks limit their services to only a few services, such as check cashing, direct deposit, and ATM card transactions among others. By outsourcing these functions to third party companies, a traditional bank risks losing its competitive edge and losing out on business to competitors. Today, many customers are opting for fintech solutions over traditional banks because of this convenience and investment return.
Apart from cutting operating costs and investing in new technologies, fintech companies also provide consumers with valuable information regarding financial services and products. Some of the popular services offered by fintech are life insurance, mortgages, investments, investment plans, car loans, student loans, health insurance, etc. As a result, many consumers have gained a better understanding of the cost and process of various financial products. In fact, many banks and other financial institutions have already launched apps for android to target this shift in consumer attitudes towards financial services and products.