Only a few short years ago, the only access people had to their finances were in-person visits to a bank. Today, we control our accounts from apps, transfer money to friends and family via Venmo or one of its competitors, and are becoming increasingly accustomed to financial technology, or fintech.
Technology is completely changing the finance industry. It’s caught the attention of old-fashioned money managers, and it’s not something that anyone in finance should ignore.
Fintech is ever-present in 2020, and only shows signs of growing.
In short, it is any technology that improves and automates the delivery of financial services. It's all about making it easier for consumers of all kinds to manage their finances digitally.
The term emerged early in the 21st century to describe technology on the back-end of financial institutions. Today, it has shifted to a much more consumer-oriented path, incorporating many different industries.
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Examples of different types of fintech include:
The truth is, we all do. If you have a budget app or use online banking, you use fintech. On a broader scale, fintech is used in B2B, B2C, and C2C settings. Businesses use technology to get financing, loans, and other financial services via mobile devices. B2B also uses cloud-based platforms to interact with financial data to improve their services.
There are many B2C and C2C uses for financial technology as well. Customers use cash apps like PayPal, Venmo, CashApp, and more to transfer money via a mobile device. Many consumers use budgeting apps, like Mint, to manage finances and track spending. In fact, several of the first big players in fintech were B2C applications for payment and lending.
While some view fintech as a threat to the banking industry and traditional financial services, it actually provides an incredible opportunity. The financial companies that are able to incorporate new technology and leverage data will be able to give customers the experiences they want.
The future of banking and financial services face upcoming challenges and trends. Many of these themes can be addressed with fintech. The top transformation challenges that the future of banking face includes:
Financial services are heavily regulated, which is why fintech is a major concern for many governments. Companies face several regulatory challenges and safety concerns with fintech. It is an even bigger challenge to develop a single, comprehensive approach to fintech risk management, but governments have customized existing regulations to fit the fintech landscape.
For financial institutions, risk management should be a concern, but it should not prevent the adoption of fintech. Pay special attention to regulations, compliance, and requirements to ensure your fintech solutions are secure.
Keeping up with the pace of fintech is critical for modern financial services companies. However, doing so is about more than chasing trends. To seamlessly integrate new fintech into your financial institution, you must adjust the processing, decision making, and overall structure of your company.
For customers, new financial services technology simplifies financial decisions. By leveraging machine learning and artificial intelligence, fintech learns the habits of users, which helps them make better spending decisions.
Another major factor of fintech is customer service. Chatbots and AI interfaces provide automated customer service, which helps increase customer satisfaction and save on staffing costs.
Many financial companies are also leveraging fintech to fight fraud. They use big data about payment information to flag suspicious transactions, which can save consumers a lot of money and hassle in the long-run.
As far as the future of fintech is concerned, there are even better days ahead. The future of fintech seems to lean on cooperation and collaboration or disruption. For those reasons, fintech in the future could be even more powerful and transformative. More and more capital continues to be invested in fintech companies, which is a strong indication that the future of fintech is promising.
Fintech will drive new business models, embedding itself in every part of the financial ecosystem. Layup Content will help your financial services company with its digital marketing strategy, especially as you enter fintech. We develop a comprehensive content marketing plan to help you attract and build customer relationships.
To learn more about our fintech content marketing services and how we can help your company, schedule your breakthrough call today here.