Fintech: What IS IT and how to boost this financial service

The financial technology sector is expanding rapidly with numerous fintech startups emerging. Consequently, companies must depend on technology to streamline and automate processes for services in this industry.

In this article, you will learn more about fintechs, what they are, and how you can learn to leverage financial technology in your organization and start offering more modern and innovative services in the banking sector.

What is a fintech and how does it work?

A fintech is a company that employs innovative and disruptive technological resources within the financial segment.

Its name stands for 'fin' finance and 'tech' for technology. As the word says it means a combination of finance and technology.

The goal of a fintech is to offer financial services in a flexible, fast and available way and to be able to operate in various global markets. They use mobile platforms and applications to enhance the customer experience with financial services.

Some of the most recent advances that fintechs use are Machine Learning, Blockchain and Data Science to be able to perform various activities, from processing credit risks to managing hedge funds. 

Characteristics of fintechs

Robotic process automation  

Automate repetitive and manual tasks, such as data entry and account reconciliation. This can help reduce errors using tools such as Power Automate.

It also significantly reduces operating costs, as no manual intervention is required and resources are optimized.

Artificial Intelligence and Machine Learning

It improves customer service because automatic responses and assistants are available 24 hours a day, 7 days a week.

Artificial intelligence and machine learning are also used to analyze large amounts of data, having better insights that help personalize services and detect fraud.

Cloud Banking

Migration to the cloud allows fintechs to scale operations and services more flexibly and efficiently. This also generates savings in maintenance costs and physical infrastructure upgrades.

Open Banking

This benefit of fintech makes it easier for customers to share their financial data with third parties in a more secure way, thus promoting innovation in financial products and services.

Open APIs enable the creation of new services and integration with fintechs.  

What are the advantages of fintech

Fintechs are changing the financial world in many ways. First, they offer easy-to-use payment platforms for online stores and businesses and make banking services simpler by removing intermediaries.

By not having physical branches, they can charge less for their services. They also use technologies like blockchain to make everything clearer and more secure.

Fintechs make financial services for everyone, removing the difficulties that traditional banks tend to put in place. They also help other companies assess risks and verify identities.

They offer tools to manage your business money and can even teach you about finance. If you want to invest in the stock market, some fintechs help you do it from your cell phone.

They are even changing how insurance works and have created banks that only exist online.

SECTORS THAT UTILIZE FINTECHS

The impact of fintech has reached several sectors, such as:

Mobile banking

Fintechs have revolutionized how we use our smartphones to manage money. Now you can pay in stores, send money to friends or get paid for your services. All from your phone, saving time and avoiding visits to the bank.

Big data and predictive models

They use large amounts of data to better understand their customers. With this information, they can predict who is most likely to repay a loan on time or which financial products each person is interested in.

This helps them offer more personalized services and make smarter lending and investment decisions.

Compliance

This sector focuses on helping businesses comply with financial laws and that's why fintechs have created tools that automate much of this work, making it easier and cheaper for organizations to follow the rules. This is especially useful for smaller businesses that can't afford large legal teams.

Crowdfunding

Crowdfunding platforms allow people to raise money for their projects or businesses directly from many people. This has opened up new forms of funding for entrepreneurs who previously relied on bank loans or traditional investors.

cryptocurrency AND blockchain

Fintechs are at the forefront of using cryptocurrencies such as Bitcoin and blockchain technology, offering ways to pay and transfer money that are faster and, in some cases, cheaper than traditional methods. In addition, blockchain is being used to make transactions more secure and transparent in various financial sectors.

Examples of fintech 

Let us now look at some examples of what fintechs are:

Neobanking 

Also called neo-banking, it is a big part of the fintech industry, as people today need easy digital access to their bank accounts, especially on a mobile device.

Neobanks are banks that do not have physical branches and serve customers with checking, savings, payment services and loans in a 100% digital infrastructure.

Payments or transfers

If you want to send money to another country, it is quite expensive to do it through a bank and this is where fintechs emerge to facilitate this process.

They focus on low-cost money movement and make it much easier to send money digitally anywhere in the world.

Cryptocurrencies and blockchain

Although these two technologies can be considered independent of a fintech, both are necessary to create practical applications that advance these companies.

Several companies specialize in buying and selling cryptocurrencies that allow online payments to be made without the need for intermediaries. They use cryptography to make the payment secure.

Financing

It helps to simplify risk assessment, speed up approval processes and facilitate access. It is now much easier for people to apply for loans on their mobile devices.

Also, applying for credit is much faster and a variety of solutions are available, from mini-loans to business lines of credit or fast credit.

Insurers

Another example of a fintech is insurers. New financial technology startups are partnering with traditional insurance companies to help automate processes and expand coverage. 

How to leverage fintechs

Here are some of the ways you can leverage a fintech to help you meet market challenges and enter the world of technology:

Digital banking consolidation

It is important to develop and implement short- and medium-term strategies with your organization's leaders, and these should address the challenges that arise in the marketplace to position your institution as a leader in digital services.

Leverage new technologies

An excellent way to boost a fintech is to use artificial intelligence to improve operational efficiency, optimize processes and improve decision-making.

Improve the customer experience

You can use digital tools that ensure effective feedback response and thus personalize products or services for your customers.

Invest in digital infrastructure

Improving internet connectivity and cyber security is crucial for fintechs. Governments and private companies can invest in 5G networks, fiber optics and data centers. This creates an environment where fintechs can operate quickly and securely.

Implement effective marketing strategies

Finally, design a solid marketing strategy that will help you reach your target audience. You can make use of social media, content marketing and email marketing to increase your brand's visibility.

Look for ways to differentiate yourself and add value to your customers. 

Innovate your financial services with London Consulting Group 

At London Consulting Group, we focus our strategy on increasing your company's profitability through innovation, adapting to new generations and anticipating market changes. In this way, we improve the customer experience with new advanced technologies.

With us you can have the digital transformation you are looking for, as we modernize the technological infrastructure and expand digital services to introduce new financial products and collaborate with fintechs to accelerate innovation, and improve efficiency and customer experience.

Contact us to start implementing the business solutions you need.