August 31, 2017
From an external point of view, FinTech (a combination of the words “Financial Technology”) can be described as the techpreneural movement looking to revolutionize the traditional banking sector by offering products which make receiving and sending money easier. The main reason behind this revolution is the traditional banking and lending industry’s strong resistance to change and heavy regulation.
FinTech is a fast evolving technological trend that covers diverse ideas related to the financial services sector. Who exactly is FinTech? Just a few years ago, the term FinTech was used to describe a large bank’s IT server room or department.
However, this is all changing as startups are emerging and becoming established players taking ownership of this term. Below are some of the ways in which these new businesses are changing the banking industry.
Alternative Lending Services
As opposed to the traditional institutions, today’s startups are providing novel approaches to personal loan acquisition, giving more and more individuals access to faster, easier lending application experiences.
For example, the Lending Club, which went public in 2006 offers peer to peer lending services. Today, the company has grown to become one of the largest lending marketplaces in its niche market.
Apart from changing the way people are lending cash, the way you pay for things is also changing. New startups are making it easier for small businesses to accept and process card payments via cheap terminals.
In addition, it is now possible for any business to accept card payments online through online payment services, which can be used to make purchasing, for example, insert molding services from Weiss-Aug.com instant from anywhere in the country.
The key appeal of payment transfer businesses is that they are making it easier, faster and cheaper to make purchases. For example, when buying hydraulic shoring (ICON Aluminum Hydraulic Shoring) equipment, you do not need to have a trusted intermediary to sit between you and the supplier. This makes transactions cheaper, easier and quicker compared to conventional bank payment systems.
The trading marketplace, Kraken, offers potential and current investors normal exchange functions as well as forex-like management and trading. The company is known for employing some of the tightest security strategies in the cryptocurrency world. In addition, it was the first Bitcoin exchange platform to have trading volume and prices published on the Bloomberg Terminal.
Automated Wealth Management/Investing Services
Automated investing services, also known as robo advisors, use an enormous amount of data and machine learning algorithms to make investing inexpensive and easy through removing the expensive human advisor intermediary.
These services offer a transparent, easy-to-follow process that even the most of novice investors can follow on their way to building wealth. However, it is important that you are aware that some services will attract fees and may have a minimum amount you can invest.
What Does the Future Hold?
FinTech companies have realized that by providing these financial services – like payments, investing, lending and money transfer – early helps improve the lives of sophisticated and tech-savvy customers and business owners.
For millennials (individuals born between the early 80 and late 90s) and later generations, they prefer easy and quick banking services to making appointments, walking into a bank branch to deal with a bank.
For now, major traditional financial institutions are fending off the competition using sheer scale and market reach, but the rapid investment in and growth of FinTech will ensure this does not last long.
Tabitha Gits is a super-connector with ManageBacklinks.io who helps businesses with building their audience online through outreach, partnerships, and networking. Tabitha frequently writes about the latest advancements in the SaaS world and digital marketing.