Financial technology refers to applying technology in the finance sectors such as banking and insurance to issue both products and services to consumers. It is also known as Fintech.
The financial industry has always adopted technology in its operations since time immemorial. However, with the rapid evolution of technology and the introduction of better and more efficient devices, financial service providers have had to adapt and offer tech-savvy solutions.
Today, most of the world’s population has access to smart devices such as smartphones and tablets and access to affordable internet, making it easy to disseminate financial services digitally.
Benefits Of Financial Technology
Financial technology has an array of benefits which include;
1. Speed and convenience
Technology enables the delivery of products digitally to easily reach clients and consumers, who then access what they need to at the press of a button and in their comfort zone.
2. A variety of choices
Since consumers can access products remotely, they can pick from various choices regardless of their location. Clients don’t have to visit the places one after the other to know about the product; just swipe and view.
3. Personalized products
Financial technology enables financial service providers to acquire and store clients’ data to offer familiar products. For instance, a client interested in smart gadgets will specifically be offered related marketing material. In contrast, a client interested in wood carving will display the available variety of similar products.
4. More affordable deals
Fintech companies mainly concentrate on reaching their consumers online. Most of the time, there is no need for investing in other physical locations; thus, cutting down on the company’s operating cost, which translates to better deals and prices for their customers.
Risks Associated With Financial Technology
Apart from the benefits, there are also risks accompanying financial technology. They include;
1. Rash decision making
Financial products available online may not have complete information listed about them, with limited ability to enquire more and do background checks. Thus, consumers make quick decisions to purchase the products then later realize it does not suit them.
2. Misuse of personal data
Companies using financial technology to offer their clients better service by acquiring their data may leave their clients’ information exposed. The information may land in the wrong hands and be used for malicious activities, including cybercrime.
The technology is undoubtedly great! However, some consumers do not know how to use it for their benefit, while others do not have access to the internet or smart devices. Therefore, such people are excluded from experiencing all this financial technology greatness.
Applications Of Financial Technology
Fintech is widely used in the finance sector, where it is applied in the following;
1. Mobile banking
Gone are the days when you had to wait in long queues to be served in financial institutions. With the current technology, any consumer at a particular financial institution can perform all manner of transactions via their phones in the comfort of their seats at home.
Financial lending companies, such as heartpaydays.com, also use the technology to provide their services to consumers via their websites.
2. Crowdfunding platform
Rigorous growth of financial technology has led to the rise of crowdfunding platforms that have been of massive assistance in connecting the upcoming entrepreneurs with potential investors and markets beyond their geographical boundaries.
Such platforms have also been used to raise funds globally for people under different circumstances, including supporting activities that have got international recognition.
3. Mobile Payments
Traditional methods of payments have also been scrapped, and better ways to get your bills paid using various payment apps have been introduced. They are convenient, and you don’t need to walk to the bank or other relevant financial institutions to take care of your bills.
4. Cryptocurrency and blockchain
Due to financial technology, digital currencies have been popping up all over the globe and may not stop anytime soon since the technology is continuously evolving. Cryptocurrency is highly secured by blockchain technology and does not undergo interference or any form of government intervention.
Financial technology has brought about many changes in the financial sector, including trading and client outreach. Businesses have adopted technology to handle most of their work and make it easier for consumers to access their products of choice. Further developments are on the way, and more technological transformations are expected.