You’ve heard about it from friends, coworkers, and even family members. “FinTech” is the new revolution, but with all things new, you may be wondering; what exactly is a “FinTech”, and what use does it have to you?
Well, “FinTech”, or financial technologies, is basically a catch-phrase for any company that aims to use technology to make finance more accessible. These companies can either be at the forefront, offering consumers like you, digital tools to make their finances easier; or they can be back-end ventures to help financial institutions, such as banks, insurance and investment companies, make their processes more streamlined.
To Put It Simply, “Fintechs” Provides Everyone and Anyone With CONVENIENCE.
“FinTechs” can provide consumers like you and I greater options across anything from mobile payments, money transfers, loans, and even asset management. On top of this, they help businesses by providing greater options for fundraising and resource management.
And it is this convenience that has been fuelling the surging rise of “FinTechs” across the globe. In 2008, the “FinTech” market was valued at USD$930 million. In 2015, this rose to USD$12 billion. However, all this buzz and innovation behind “FinTech” could be exactly what is holding it back – financial industries are typically grounded in stability and predictability. Providing security for the users of financial companies is the single biggest consideration of any bank and “FinTech”.
So How Can You Trust “Fintechs”, When They Seemingly Go Against Everything You Want?
The answer is that it doesn’t. “FinTech” has the ability to balance innovation and security; to give you convenience that you can trust. While making money transfers easier and cheaper, with lower fees, many “FinTechs” still follow the same regulations that ensure security in traditional banks. “FinTechs” through which financial products such as investments and insurances are bought still need the same financial licenses as your most trusted financial advisor. Many of these “FinTechs” often have a team of financial advisors with them to which they can refer you to. Robo-advisors that help you simplify your personal finances are designed with algorithms that curate financial portfolios tailored to your financial goals. They help you figure out how much you need, for the life that you want.
“FinTechs” Have Changed the Way Your Finances Are Being Handled.
The big banks are worried about the rise in “FinTechs”, rapidly acquiring “FinTechs” to incorporate the innovations into their own systems, and this should excite you. “FinTechs” make doing business more accessible and cheaper because of their capitalization on new technology. They can do so because they are more adaptable and innovative, not because they are less policed. So if you don’t want to wait for a bank (which might take forever) to start doing what you want, you might just find a fintech that does so for you.
M-Pesa is an example of such an innovation. It is a mobile phone-based money transfer, financing service that has become vastly popular in the countries such as Kenya, India, and most recently, Albania. Launched in 2007, it allows users to do everything and anything money-wise, from a mobile phone. This means that in these countries, especially in Kenya, SMS messages have replaced the need for a credit card, and authorised agents such as convenience stores, all the while being regulated by their respective central banks.
One thing we know for sure is that fintech will only get bigger. While maybe not in the same way as M-Pesa has in the developing countries, more innovations will definitely come our way, and we need to be able to adapt and embrace the change. Even in Singapore, ApplePay is slowly changing the need for material credit cards. Soon, don’t be surprised if you are no longer given a physical card, but just an online representation of it.