Fintech - What is Fintech?
The term ‘Fintech’ refers to a type of business or service that provides financial technology to customers through software and/or online services
How can fintech help your business? See how easy it can be to stay on top of and even improve your cash flow with online accounting & invoicing software like Debitoor. Try it free for 7 days.
You’ve likely heard the term used in a business context, and perhaps even in daily conversation: Fintech has quickly become an important part of the way we manage our money. Fintech goes beyond what we typically see from financial institutions and some Fintech businesses have become direct competitors to banks.
Where did ‘Fintech’ come from?
Initially, the term was used to refer to the back office operations that helped financial institutions run the technology necessary in general operations. Essentially, fintech was originally meant to help businesses manage their financial processes more easily through the use of specialised technology.
The term has, however, expanded to cover a broader range of services, and has arguably become more consumer-focused. Fintech has developed into separate companies that aim to provide these financial services directly to consumers and businesses.
Fintechs grew from a realisation that consumers, including businesses, are looking for modern solutions to their financial needs - with a focus on increased automation and mobile accessibility. Innovation was needed and as a result, fintech has caused a bit of disruption in the very traditional financial world.
What do fintechs offer?
Because fintech is such a broad term, it can cover a wide range of different financial activities - from money transfers, to investing, managing payments, applying for loans, and more.
On top of this, fintech businesses aim to provide customers with more than just financial services, they also have a focus on educating the customer in personal finance and financial literacy, for example, as well as increasing access to information about finance.
The focus for most fintech businesses is to make financial services more accessible and even more approachable than the traditional style banks or other financial professions. One popular example is that of ‘Robo-investors’ - apps that allow small amounts of your spending to be put into investments.
Fintechs challenge the traditional banking institutions by offering better customer support, easier ways to get information about their finances, and simpler tools for management. They’re looking to streamline the once unpleasant processes in dealing with financial necessities.
The future of Fintech
There doesn’t seem to be any sign of fintech innovation slowing. New start-ups are appearing with new approaches to old-fashioned systems and processes, providing a focus on the needs of the customer.
A major impact of fintech is that is is causing older financial institutions to consider new ways to appeal to their customers and continue to attract new customers. This often involves an overhaul of their online banking as well as fast new mobile apps.