By Chris O’Neal, CPA, MBA
You’ve used PayPal to make mobile payments, supported worthy causes on GoFundMe or Indiegogo, and use online banking from time to time – then, knowingly or unknowingly, you are a Fintech user. Studies show that out of every three individuals in 20 major world economies, 1 is using at least 2 FinTech services.
More than half of consumers in China and India, Asia’s biggest FinTech market, use FinTech services such as insurance, lending, and borrowing, financial planning as well as money transfer.
The main innovative advantage of FinTech lies in its ability to provide efficient financial services to people who might not access traditional banking services easily.
Research shows that approximately 1.7 billion don’t have a bank account. FinTech simplifies this challenge by emphasizing flexibility, transparency, inclusivity, and speed. Consumers can easily take out loans, buy life insurance and get loans, all while avoiding expensive transaction fees and restrictions associated with conventional banks.
Little wonder, then, that experts predict that more than 82% of financial institutions are hoping to adopt FinTech technologies in the next couple of years.
Even as it is, FinTech innovations are changing the world right now:
Blockchain
Financial regulators still operate in the same way, despite all the available tech-savvy tools. They control how we use our paychecks; they can collect personal data and block transactions as they please, charge expensive fees, and dictate all terms of use.
Many people assume it’s just how centralized systems operate, but FinTech is giving us better alternatives and solutions. Blockchains have continued to rise since 2018. Many banks are now using blockchain to prevent financial regulators from meddling and interference.
Blockchain transforms conventional banking into transparent, democratic operations. It also improves equality when two or more parties are exchanging money. Because all transactions are encrypted, there is no possibility of leakages.
FinTech is also the most secure software in the market because it offers bulletproof identity authentication. There are no middlemen, so the transactions are light, fast and have no extra expenses or geographic limitations. You can easily transfer funds from the US to the UK in minutes.
Predictive Analysis and Artificial Intelligence
Have you ever heard of big data? Every minute, billions of data are being produced all over the world. By using FinTech, organizations can easily improve their business models. FinTech uses artificial intelligence to analyze trends in the financial market and detect possible fraud.
Through AI, insights are created, algorithms can be forecasted, and performances can be apprehended. By incorporating predictive analysis, demand movements are recorded, and stock price changes are anticipated. This way, investors can make decisions based on the available facts and data and work towards processes that promise higher returns.
Businesses use FinTech for other purposes such as:
- Fraud prevention
- Risk management
- Customer service
Digital Banking
For a long time, consumers’ confidence in financial institutions was tied to physical infrastructure. This concept is changing rapidly because of FinTech banking solutions. Businesses and retail customers can now enjoy faster and efficient solutions offered by back-end processes.
Customer access to finances has been revolutionized completely and numerous applications are being made available to them.
FinTech is transforming the banking sector through:
- Mobile banking
- E-wallets
- Biometric sensors
- Smart chip technology
With excellent financing options, people can gain economic freedom and better decision-making power.
Regulatory Technology
Strict protocols must always be followed in the finance world. managers, entrepreneurs, and registered companies must all follow predetermined accounting standards. Whether it is in preparation of budgets or financial statements, purchase of assets on leases – everything must follow standard procedure.
The good news is that FinTech now offers regulatory technologies also. It can help businesses manage regulations and monitor compliances in their systems.
FinTech ensures that a business’s pattern and structure strictly follow that required by international regulators. It also confirms that the business complies with state and government regulations.
Small mistakes can push a business into legal troubles and non-compliances mistakes. Not only does this damage your business’s reputation, but it also puts investors’ stakes at risk.
Financial services are being transformed by digital technology. Businesses must now incorporate FinTech software for improved efficiency. FinTech will also help them leverage economic forecasts so that they can make wise investment moves.
At the Nealson Group, it is our privilege to help our clients achieve the best version of themselves, financially.
