FinTech (financial technology), is an economic industry composed of companies that use technology to make financial services more efficient. Fintech is changing the way we invest, the way we spend and the way we interact with money. It’s a hugely lucrative industry and one that most of us are utilizing on a day to day basis.
We Bank Digitally
For numerous banking customers these days, having to stand in line to pay bills at a local high street bank is no longer necessary. With the rise of mobile and online banking, many customers, and millennials in particular, prefer conducting their banking through using their bank’s smartphone app or online banking platform.
There are some consumers that have gone a step further and signed up to use a digital-only bank, like the Germany-based Number26 or US-based Simple, and don’t bank at a traditional high street bank any longer.
It Is Easier To Invest
Recently many consumers have been shying away from investment vehicles due to the reputation of many investment firms hitting all-time lows because of poor investment advice, hidden fees and excess fees. FinTech firms like Addepar, Robinhood and Wealthfront, will keep emerging to help empower small investors and help them feel comfortable to once again participate in the investment world.
The firm Acorns is showing how novice and average investors can use their spare change as an excellent way of getting started with developing an investment portfolio that can offer them significant returns in the future.
Thanks to the Internet we can look up share prices in an instant and receive the up to the minute price. Sites such as Nasdaq.com, Yahoo Finance, Shareprice.com.au allow us to see the latest BHP share price or Google share price at the click of a finger. This alongside these new startups makes investment easier and more informed than ever.
These types of FinTech companies can help to make fundamental changes to the investment world, and help to rekindle interest in mutual funds and stocks.
We Use Our Mobile Phones For Payment
Mobile payment services like Samsung Pay, Android Pay and Apple Pay have emerged that now allow consumer to pay for services and goods in stores through utilizing their smartphones. These mobile payment services all work by scanning your credit or debit card using an app and then having the details stored in your phone. After you have made an in-store purchase you just open up the app and either tap or just hold your mobile phone over the contactless NFC-enable credit card terminal to purchase your items at point of sale.
These new mobile payment services represent a natural progression that is part of the overall digitalization of services and gradually moving towards having a cashless system. Android Pay and Apple Pay are being quickly adopted in the United States, as consumers are beginning to prefer using their smartphones for making purchases.
Borrowing From Our Peers
Up until recently, when you needed a loan for either business or personal purposes, you can to either go to a credit union or bank to apply. These options both required the borrower to have a good credit score to qualify for a loan and be offered an interest rate that was reasonable. However, in many cases, loans are not approved now since banks have cut back on lending to individuals and small businesses since the financial crisis of 2008.
However, a new kind of lending has emerged from the fintech sector called peer-to-peer lending. This refers to a method of lending where small businesses and individuals can borrow money from other individuals without having to go through a traditional financial intermediary. It offers debt financing for individuals and businesses that are having a difficult time securing a loan from a credit union or bank. In addition those lending money via a peer-to-peer platform are able to generate high fixed interest investment returns.
In order to borrow using a peer-to-peer lending platform, all a borrower needs to do is sign up at the platform, specify the amount they want to borrow and undergo a due diligence process that allows the peer-to-peer lender to make an assessment of their ability to fully repay the loan. After the application is approved, the borrower will need to agree to the loan terms. Individuals will then be able to lend to the borrow using the peer-to-peer lending platform online.
International Money Transfers Are Made Online
In the past, in order to make an international money transfer we would either need to use a high street bank to make a wire transfer or use a remittance corporation like MoneyGram or Western Union. High fees are involved in both of these options, reducing the amount of money available to send.
Several fintech companies have addressed and resolved this issue. They offer international money transfer services at substantially lower rates than the traditional financial industry does. Companies like Azimo and WorldRemit offer inexpensive international money transfer for SMEs and individuals through their app-based and online platforms.
Over the past decade, how we handle money has changed as fintech has offer new ways for consumers to conduct their financial transactions. It will be quite interesting to watch how money management continues to evolve into the future.