What is FinTech?
Financial Technology, commonly known as Fin Tech, is a line of business based on using software to provide financial services. Originally, Fin Tech was a term referring to the technology applied to the back office of banks and trading firms. With the passage of time, the term has come to encompass a variety of technological interventions in the financial sector affecting both personal and commercial lives. Simply stating Fin Tech is an emergent domain that integrates Finance and Technology. The emergence of Fin Tech has unleashed an era of Financial Revolution. Fin Tech primarily assists in generating capital for new entrepreneurs.
Advantages of FinTech
- FinTech companies are primarily aimed at ‘disintermediating incumbent financial services’ with new technology.
- Businesses and authorities have access to a wide range of data in a structured form that the emerging sophisticated algorithms can interrogate and transform into new services.
- FinTech has primarily changed the path to business as new entrepreneurs now have access to a wide choice of investors beyond the local banks and conventional investors. Thus, the setting-up and expansion of a business has become easier.
- FinTech solutions can significantly aid small and medium businesses by providing them with better cash flow, improved working capital management, and more stable or secure funding.Fin Tech can be tailored according to the specific needs of each business.
- FinTech has also been an asset for the customer side by facilitating the process of checking the account balance or setting up a portfolio investment. People can complete transactions through mobile phones or tablets enhancing efficiency and customer satisfaction.
Types of FinTech Companies
A number of financial services are provided by Fin Tech companies giving a tough competition to banks and trading units which account for the traditional finance sector. These services primarily include-
- Investment Banks– The investment banks need technology to carry out their day to day services dealing with foreign exchange, equities, bonds and the like. The technologies used by these agencies include pricing and trading applications, client management through trade processing and settlement capabilities and real-time execution of trade. Thus, Banking and finance has been highly benefitted by the rise of Fin Tech.
- Hedge Funds– Hedge funds use sophisticated investment strategies to manage portfolio investments. The employ technology to manage complex portfolio analytics and enhance risk management.
- Retail and Private Banks- Private Banks offer numerous banking services such as maintaining saving accounts, mortgages and loans. Technology facilitates the processing of capabilities to carry out large transactions and better understand client capabilities by giving them a mobile platform to establish themselves. Banking services are now available at the click of a finger.
- Trading Exchanges- Trading exchanges facilitate the trading of equities, derivatives and bond instruments. The mobilize technology primarily to match algorithms.
- Payment and Card Companies- Payment companies undertake the services of processing and management. Technology is used by these companies to increase the efficiency of the services provided, robust processing engines and facilitate strong client reporting.
- Startups- Different startups are cropping up each day dealing with a new domain but Fin Tech services are common to all. Startups use crowd funding to attract investors and avoid the tedious process of recurring meetings. They use Fin tech to appeal to a large audience all across the planet. Application of Fin Tech is like to set startups on the path of Viral Growth.
The advent of FinTech has opened up a world of possibilities enhancing the efficiency of the services provided. Businesses have gained the capability to provide a wide range of new services that would have been unthinkable a few years ago. Fin Tech has become an integral part of the financial sector in the present day benefitting it by providing latest opportunities and technology.
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