New technology always rings a few bells. Technology is important for making lives better though. Today, technology has modernized nearly everything in this world, but the financial sector hasn’t undergone any drastic changes. However, new concepts for integrating finance with technology are being developed, the most famous of them being Fin-tech. This concept is being adopted by many major financial institutions and is quickly gaining leverage with people. In this article, we will know more about Fin-tech and know understand the reason why Fin-tech is becoming so popular amongst the masses.
What is Fin-tech?
The term “Fin-tech” is actually the short form of the word “Financial Technology”. This concept aims to allow the effective integration of information technology and the industry of financing. This concept employs the use of various devices for this, one of the most famous being online payment and banking technologies. Originally, Fin-tech was used only by large organizations for handling large-scale financial operations, but recently a great shift in this trend has been observed. Nowadays, small companies and even certain one-man start-ups are using Fin-tech systems for managing their finances. These start-ups are finding Fin-tech to be a great investment for their business. Also, these trends aren’t expected to change anytime soon at all. Fin-tech systems include technology like online payments, digital wallets and online money transfers.
What paved the way for Fin-tech’s fame?
Fin-tech, believe it or not, wasn’t this famous at and sometime after its conception. Only the very big, multinational companies would use Fin-tech for managing their finances at first. The start-ups were wary of this technology, as it was a relatively newer one and they could not afford to risk their whole financial system for a new technology. However, as time passed, they began to see the practicality of the new system. The new system also benefitted from the improvements in social media and advertisement technology, which gradually improved its efficiency.
Another turning point for this technology was the 2008 Global Financial Crisis, which gave quite a lesson to big businesses and smaller ones alike. These factors allowed the industry of Fin-tech rise to become the must-have finance management technology of the modern-era. Slowly, many small start-ups began using Fin-tech as their main financial management system. In fact, you can find many start-ups that became very successful due to these systems. Examples include OnDeck, Lending Club, Square and Braintree.
Fin-tech – How does the data looks and its analysis
Fin-tech hasn’t still completely displaced traditional debit payment methods. In fact, they are still being used extensively and their usage is even increasing. However, the usage of Fin-tech-based finance methods is growing at an even faster rate and the data also shows that these systems might completely replace traditional payment methods in the coming years. For example, almost 78% of people between the age group of 18-34 years have used Fin-tech systems like online payment at least once in their lives. Also, about 65% of the present adult population has used such systems in their lives. This is mainly due to the fact that online payment gives them a lot of privacy, as their debit and credit records are not exposed to the sellers.
Another field where the use of Fin-tech has expanded greatly is the field of money transfers. Often people have to transfer money urgently and securely to another person. Online money transferring services are becoming very popular due to their reliability in these fields.
What about physical stores?
Unfortunately though, the growth of online transactions and other Fin-tech methods is much slower in brick-and-mortar stores. It is still very rare to see a small shop offering online payment schemes for its customers. In fact, the low-adoption rate of Fin-tech services by physical stores may be a leading cause of why online transaction hasn’t completely dominated the financial market by now. A major cause of this may be the fact that adopting Fin-tech systems for finance requires certain hardware, software and specialists, which might be economically unfeasible for small businesses. But even this is changing eventually as new advancements in technology are gradually reducing the investments required for this.
How is Fin-tech affecting the banking industry?
Another major industry that Fin-tech is slowly replacing is the banking industry. The various payment and transfer methods that Fin-tech is introducing are proving to be a very useful counterpart to traditional banking methods. For example, if a consumer having a credit card wants to buy something from a store, he or she will have to find a nearby ATM to withdraw the cash and then buy the desired object. But with Fin-tech methods, one can easily buy an object with the help of a digital wallet, without even leaving their house. Digital wallet providers such as PayPal are being increasing used by the general public to buy in stores or send money directly to another person’s wallet or account. Also, they can be used for getting other services too.
Can Fin-tech revolutionize money itself?
One of the biggest and most innovative impacts of Fin-tech is the invention of cryptocurrencies. Nearly everyone knows about cryptocurrencies nowadays. Cryptocurrencies like bitcoins are revolutionizing how people look at money itself. They are very secure as they are digital, and cannot be stolen easily. Also, they are very convenient to use due to their uniform exchange rates, allowing them to be used all around the world. Cryptocurrencies are also allowing businesses to be conducted easily all around the globe. Another feature of cryptocurrencies like bitcoins is that due to the fact they are digital, they don’t need expensive metals and other resources to be manufactured.
Fin-tech is really revolutionizing business, trading, finance and even the whole concept of money. In this world where modernization is the key to survival, Fin-tech is the key to the modernization of the financial field. The field of finance has been dormant for a long period of time, but now is the time to change. However, businesses will also have to keep up with times so that they don’t fall behind their competitors.