Fintech is a term used to describe companies that provide financial services products or services that are based upon the technology, often which result in highly innovative and disruptive products and services.
"Fintech" as a word is a blend comprised of "finance" and "technology". It's what is driving the financial industry that is a new alternative. Fintech businesses include Lending Club, Funding Circle, MarketInvoice, and Kantox.
1. Your Financial Advisor May Be Sitting inside Your Purse
Financial management apps give users access to financial guidance upon demand. They use transactional or even behavioral information to provide insights, strategies, and reminders to help users manage their finances and make sure that bills are paid.
If you tend to spend on takeaway food when your bank account is depleted in cash, it will be noticed in the app, and require you to cut back on the amount you spend. Others may decide to make an automatic sweep of the money at the end of the month. Then, put it in a savings account.
2. You'll Have Many Options to Manage Your Money
Established FinTech and traditional banks are fighting for an encumbrance in markets for finance. FinTech companies have lower operating costs and are better able to address the needs of customers since they have access to numerous information on their clients.
On the contrary, traditional banks have networks across the globe and have a loyal customer base, solid trust from institutions, and a solid regulation security. This battle has increased competition in the market for financial services and will likely provide more choices for consumers.
3. Transfers to The Bank May Be Quicker and More Affordable
If you regularly transfer money to relatives or acquaintances from different countries, then you're aware of the charges. To counter the loss of around $32 billion due to charges for remittances across borders FinTech services compete with banks that are established by providing cheaper fees and faster transfer times.
The world's developing countries, such as companies like BitPesa, which is a money transfer company, operates in Nigeria, Kenya, Uganda, Tanzania, Senegal, Democratic.
4. Your Bank May No Longer Exist
The majority of millennials living in the US aren't convinced that they'll require institutions in the next 5 decades. They're instead betting on new companies in the area of technology to take over traditional banking services.
The attraction of FinTech is in the value-added offering of financial services and the vast variety of innovative solutions for the demands of consumers on a daily basis. Its appeal may be diminished because of the growing awareness of the potential dangers associated with the new FinTech services.
5. Finance + Technology = FinTech
The intersection of finance and technology is not new. The banks in the past had a long-standing tradition of adopting the latest technology. ATMs, credit cards, and chip-and-pin were the newest frontiers.
However, FinTech is disrupting the structure and the delivery of services in the financial industry in a larger way. From micro remittances, peer-to-peer lending, budget planners for mobile phones as well as mobile payments, the latest firms are ditching traditional middlemen in the financial sector and banks.
6. A Robot Could be Keeping Track of Your Cash
A Robo-advisor collects information from clients about their financial condition through surveys online. Then, it uses the data to offer advice or put assets of clients in investment. US firm Wealthfront provides an example of a Robo adviser system that has over $3.5 billion in assets.
7. It is Harder to Take Your Wallet
Although cash remains the main method of payment for around 85 percent of consumer transactions in the period between 2009-2014 the percentage of transactions that are cash-free has been increasing by more than fifty percent.
The biggest tech companies have already established themselves in this space and now have Apple Pay with a 57% market share. It is close to Samsung Pay as well as Android Pay.
8. It is Much More Difficult to Compromise Privacy
FinTech firms heavily rely on the collection of precise information about the habits of their customers as well as their habits. This has resulted in the financial sector becoming the most significant user of data.
The proponents of FinTech claim that customers will benefit from personalized services and lower prices that are possible because of the ability to understand the preferences of consumers. The opposition claims that this not only raises the risk of data breaches.
Fintech is altering the way we conduct financial transactions are conducted and already has a direct impact on the way that an increasing number of individuals and companies alike manage the financial transaction.
Are banks worried? They definitely are. However, their concern isn't related to the size in the marketplace that Fintechs have, as they represent just a tiny portion of the overall marketplace. The main issue is what fintech will change the share of the market held by banks in the coming years.