Fintech– the word in vogues these days. It is the fusion of the words finance and technology, meaning providing innovation through technology and software to access the financial services. The Fintech industry has brought in a lot of innovation and ease in the working of the traditional financial system through renovation and innovation in various sectors such as mobile payments, P2P lending, insurance business lending business, equity lending etc.
Let us try to understand what it can do for us.
Lower cost: The innovation in the system will bring more technological advancement and will lower down the cost and improve the quality of services. Then they do not have to go through the regulatory burden as in the case of traditional financial system. Hence reducing the borrowing and lending costs, which mean more attractive offers!
Transparency: The accessibility and availability of the system makes it more approachable for the people and hence giving it and advantage over the conventional system. Single credit score, transparent relationship banking gives them the edge in this risky environment.
Exact match: They match savers to the borrowers rather than making an incorrect match of deposits and loans. It does not put itself into the bizarre situation and reduces its risk factor. Thus making all believe that it is responsible.
Customer experience: The banks are still working with the same old approach and thus they have a reduce share in the market if customer experience. They are losing it to the new digitally equipped companies which are providing a user friendly and convenient customer focused services.
Innovation: The mantra is-New innovative ways to deal with the business makes the business grow. For e.g., SWIFT the interbank payment system was developed in 1973 to provide connectivity. This innovation brought in more business to the banks. So is what now the “Fintech’s” are doing they collaborate with different industries to generate value and new business models.
All these benefits make it a suitable industry to grow and develop. But it will need to assess the environment for more opportunities and be more hawkish and diligent at the same time in order to give rise to an unconventional mechanism in the traditional financial system.