Although the term ‘FinTech’ has been around for a while now, this fledgling offshoot of the larger banking industry still sounds relatively new to some people. So many entrepreneurs are ignorant of the term, neither do they understand it. It is no news that technology and innovation have greatly impacted our daily lives. They have changed our way of thinking and how we deal with different fields of life, business is no exception.
FinTech is derived from two words; Financial and Technology and it is basically used to imply technologies used and applied in the financial services sector. FinTech touches not just the financial services sector but every business the financial services industry deals with. Fintech aims at disrupting traditional financial services including mobile payments, money transfers, loans, fundraising and asset management by bringing in innovation to make these processes faster, easier and more secured.
The impact of Fintech on business cannot be overemphasized as it constitutes an integral feature of every startup whether large, medium or small. For an entrepreneur who needs capital to start up a business, the traditional way to source for funding was to go to a local bank for loan, seek out a traditional investor or meet your friends and family to give you a loan, of course after investing your personal savings. The advent of FinTech has made processes like this easier with the introduction of crowdfunding, an online platform where you sign up to obtain needed funding by soliciting contributions from a large number of people in the online community, so you no longer have to go through the stress of finding an investor for your big idea or perhaps you don’t have the collateral or credit to get approved for a loan. Private lenders like PayLater, QuickCheck etc are taking over alternative-lending space, making it easier for anyone to access quick loans (business or personal) when needed.
Also, Fintech has made it easier for small businesses to accept payment. Customers can always make payment using their credit or debit cards anywhere even in toyshops, eateries, shools, shopping stores, hairdressing salon etc, almost every small business these days make use of a POS machine, while customers are also free to make a fund transfer using the mobile banking applications on their phones, unlike the traditional way of accepting only cash payments or having to queue up to make deposits at the bank.
In the event of entrepreneurs going global i.e. international trade, where an entrepreneur wishes to import a product from another country, FinTech has made international money transfers between a buyer and seller possible such that an entrepreneur can make payments using PayPal – an application that converts from one currency to another, or TransferWise – an application to transfer money overseas at a low cost. There a host of other online money transfer app for international trade.
Transparency is necessary in any transaction where money is involved, to build trust between both parties. FinTech presents transparency in business as you can trace and track financial transactions anywhere and anytime, even on your mobile phone. This feature serves to tackle fraud and prevent errors in payment.
There are quite a number of benefits which FinTech brings into a business.
The rise of FinTech has opened up a world of possibilities for businesses as they can offer more services than ever and for a fraction of the price of what it would have cost before.
I would be writing more on FinTech in the next episode to delve deep in the opportunities therein.
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