Fintech

A Lay Man’s Guide to Fintech | Fintech Definition

Fintech definition-what is fintech?

This article is focused on introducing the Fintech sector, the Financial Technology Sector.Fintechhive is a website specifically dealing with Fintech related articles from across the globe.

What is Fintech?

Fintech is one of the emerging sectors and there are still many things about Fintech that people are not yet aware of.

Many business entities are engaged in researching this technology and are devising ways to use this technology in the day to day operations.

Of late, many of you would have heard the new word FinTech and would be wondering what Fintech really is? And how do the entrepreneurs benefit from this?

You might have also heard many corporations investing in Fintech. Some other discussions would involve what is the impact of Fintech in the global economies ? or  what does Fintech have to do with the banking industry and financial services sector ?”.Let us unravel  Fintech from the basics.

Definition of Fintech

FinTech stands for Financial Technology. The terminology describes exactly what the Fintech is about: the technology that is applied to all financial services sector dealings.

It is predominantly used by financial institutions. This is technology provides the support function for all the financial transactions.

The financial technologies sector has grown immensely in the recent years. FinTech sector is coming out with new technologies which are redefining the conventional financial services.

Financial technologies have made an impact on the mobile payments and cash transfers segment. Online loans and fundraising along with quality management.

FinTech is a vast space with very promising real-life applications. Many Global Corporate giants also acknowledge this fact.

Accenture has released a research report focusing on Fintech. It had mentioned the vast growth in the Fintech sector for the last 7 years.

Statistics quoted that the funding in Fintech globally has risen to 12 billion USD as of early 2015. The same number for 2008 was said to be just above 900 million USD.

There are still unexplored avenues in financial technology, and this can be a significant factor for increased investments in Fintech services.

Fintech Startups

Fintech startups-Fintech definition

Many professionals are using the boom in financial technologies and floating startups with dedicated Fintech services.

Because of the smaller structure of the startups, they are extremely agile. This has forced many of the big financial market players to rethink their strategy.

They had to adapt to the same level of flexibility as the startups in order to retain market capitalisation. Many of these organisations are also funding small entrepreneurs.

Even venture capitalists are directing their attention to the Fintech sector. This sector undoubtedly has the potential to create a phenomenal impact in the way the business is conducted.

Traditional Business models Vs Fintech

In the traditional business models, it was extremely cumbersome to raise capital for starting a business.

It was a long chain of events starting from the physical visits to the local bank for a loan or look for a venture capitalist for seed funding.

This has changed with the creative solutions deployed because of the growth of the FinTech sector.

Fintech has allowed crowdfunding or peer to peer lending, mobile payments and e-wallets, and fund transfer services worldwide.

There has been a revolution brought by the entry of startup businesses. These Fintech Startup companies are extremely flexible with creative products and innovative solutions.

These Fintech startups have also perfected the art of doing business and the institutional giants are following the way.

Services Offered by Fintech Startups

Let us look at some of the services provided by the Fintech startups.

Crowdfunding

Let us begin with the most enticing service offered by the Fintech companies. Crowdfunding is an innovative solution to the most common problem faced by entrepreneurs.

Raising capital. Crowdfunding allows prospective entrepreneurs to raise funds easily and inexpensively. Their source includes people across the globe that these entrepreneurs have never even met.

As opposed to the traditional method, crowdfunding allows capital to be raised in a shorter timeline.

Payment Facilities and Digital Fund Transfer

Payment Facilities and Digital Fund Transfer is another service which has changed the way business is conducted. Many businesses have adopted the easier mode of accepting payments using Fintech applications.

The traditional models of businesses were too reliant on cash transactions. With the global outreach, the financial technology services have made it possible for a financial transaction to happen on a global scale.

International cash transfers can be done with ease and that too at a lesser cost.Companies, for instance, PayPal, also provide currency conversion services. This has given a significant boost to international e-commerce.

This has also given entrepreneurs the opportunity to look for funding at a global level.

There are also some companies like TransferWise that have started competing with Banks.

They provide international cash at a 90% discount in comparison to bank transfer fees.

Consumer Behaviour and Fintech

FinTech has radically increased consumer behaviour and expectations at a phenomenal rate. Earlier, consumers had to spend a lot of time with dealing with banks and other financial institutions.

Nowadays, users have easy access to the same financial transactions with help of Fintech companies.

They can not only manage their payments but also access their investment portfolio using a mobile phone.

Fintech offers an array of services with the utmost ease of access.

This is the outcome of the flexible structure and innovative products of the startups. Many corporate giants have been forced by consumer expectations to meet the same level of services offered by the startups.

With the increasing dependence on financial technologies, mobile payments and digital transfers have become a regular event in today’s world.

The Beginning of the Fintech Era

The level of services offered to customers has revolutionised the financial sector since the emergence of Fintech.

The traditional, hierarchical and rigid framework of the financial institutions and banks have been replaced by the high paced Fintech startups.

Businesses offer to provide a range of services and charge a fraction of the cost.

Fintech is an emerging sector and holds a lot of promise.

Venture capitalists are increasingly supporting startups and many entrepreneurs are constantly working on new and further developmental technology.

Research is also being conducted on integrating other technologies like blockchain in the financial services sector.

Summary

This post covered in detail the Definition of Fintech and the Services Offered by Fintech Companies.Hope this article was of your help in knowing What is Fintech all about? Leave your valuable comments and feedback in the comments section below.

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