You’ve probably heard this new term “FinTech” somewhere, but what is it exactly? And why should all entrepreneurs know about it?
FinTech (Financial Technologies) in the broadest definition means technologies applied in the sector of financial services, mainly used by financial organizations themselves in their operations. In addition to that, FinTech is increasingly starting to involve services that are disrupting regular financial operations like mobile payments, loans, money transfers, fundraising, and so on.
Don’t think that FinTech is just another buzzword. According to a report by Accenture, the investment in this sphere has increased sharply from $930 million (2008) to more than $12 billion worldwide (2015).
And we can still see this trend present, the investments in FinTech are only growing, which is not surprising as these technologies can be used not only in the financial sector but in essentially every business. FinTech startups are small but they develop very fast, that’s why they are able to compete successfully with the traditional financial institutions. Fast innovations are key to thriving today.
How FinTech can change your business
In the past, if a person decided to start a business, they would go to a bank and apply for a loan or try to find a traditional investor. And in case a company wanted to take credit cards, it would have to have an account with a credit provider along with a landline and lots of equipment. Thankfully, it’s not the case anymore.
FinTech is rapidly changing the way small businesses start up, receive payments, and go to the international market, thus making it so much easier for business owners.
Instead of investors and loans, there’s crowdfunding – you can raise money fast and cheaply from people living in different countries who you’ve never even met. It has leveled the field for market players and made the process much less time-consuming.
It has also become easier for small companies to accept payments. Even a farm in the middle of nowhere can take credit and debit cards now with such services as Square or PayPal. There are fees, but on the bright side, the business owner doesn’t have to have a business of a certain volume to qualify.
Now let’s talk about international money transfers. They have been a thorny issue for entrepreneurs for a very long time, but thanks to FinTech, they are also getting easier. PayPal suits for smaller transactions, as it automatically converts currencies. Anf for bigger ones, there’s a service called TransferWise, which is streamlining international transfers with a 90% discount on bank fees.
How FinTech is changing your customer
FinTech also influences the behavior and expectations of customers. They are so used to accessing all sorts of data in just seconds that it seems absolutely natural for them to adjust their investment portfolio while waiting in a line at a grocery store.
So clients of both small and large firms expect the same high level of service. They also expect to be able to use a credit card or even their phones everywhere. It’s essentially a warning to businesses that there is no way around introducing the latest technologies into their work, otherwise they might lose business.
The FinTech industry is changing rapidly, and wise business owners will do everything to stay informed. Companies will be able to offer many more services at a fraction of the price, which in the end will be beneficial to everybody.