In the recent years, FinTech (or “Financial Technology”) has been gaining significant amount of interest globally. Big data and cloud, predictable business models, scalability and new technologies arriving at a rapid pace are some of the key factors fueling this Fintech storm. Although Fintech is just taking its baby steps in the digital economy, it is quickly revamping finance as well as other business verticals. So much so that money continues to be poured into Fintech industry as it hits a historic peak value of $112 billion last year (KPMG Pulse of Fintech report). From cryptocurrencies to peer-to-peer lending and investment options, payments processing, crowdsourcing, wealth management, regtech, and insurtech, businesses have a lot to gain from the FinTech solutions
. Individuals and businesses now have a convenient and affordable platform to interrupt the bank monopoly. In this blog post, we take a closer look at this emerging tech phenomena and discover why it is a smart investment opportunity for businesses.1. Diverse Industry
Financial Technology is a dynamic segment that combines innovative business models and technology to deliver convenient, customized, and affordable consumer experience. When people choose to invest in FinTech, they are gaining access to a new world of opportunities. Financial technology is poised to create an impact on different businesses
as it covers a wide variety of technologies, audiences and services. Investors can explore tones of avenues that will reap good returns. According to the KPMG Pulse of Fintech report, the exponential rise of global fintech funding is fueled by mega M&A and buyout deals. Strong diversity of global fintech hubs and its subsectors (regtech and insurtech) makes it a perfect choice for the investors. 2. Greater Flexibility
Customer expectations and payment processing technology are advancing swiftly and traditional finance sector fails to keep up with the speed and agility. Lack of flexibility, geographical constraints, complicated legacy systems and risk-averse budgeting are some of the major disadvantages of traditional banking. And what the traditional banks and finance sectors lacks, is offered by FinTech solutions. As most of the FinTech businesses are smaller and younger, they follow lean and agile structure. Investing in FinTech startups may cost less, but can yield valuable returns. Moreover, FinTech companies employ API (Application Program Interface) based systems that ensure increased operational efficiency, scalability and flexibility. Customers can easily avail a multitude of financial service options and services customized to meet their unique needs. 3. Transparency
Trust and transparency are crucial factors for building a mutually beneficial relationship. But today’s finance and banking sector lacks transparency and fails to guide its customer towards their best interests. And that is why the millenials have been placing their trust in tech over traditional banks. The millennial generation has a strong inclination toward brands that offer personalized service, best value, transparent approach, and ultimately, can guide them attain their financial goals. With the emergence of FinTech startups, a new wave of financial transparency has hit the industry. In addition to the convenience and mutual trust factor, consumers are provided with an opportunity to compare different financial services in real time. When coupled with the right set of regulations and standards, FinTech solutions can gain a major competitive advantage in the market ecosystem.4. Borderless Technology
With new technological trends and applications emerging every now and then around the world, the FinTech segment need to adapt on its own. As FinTech and finance industry collaborates, it breaks down borders and turns it into bits and bytes. With the advent of cryptocurrencies and other borderless financial services, the demand for next-generation international B2B payments are met. Investing in FinTech startup provides an ideal opportunity to participate in the global economy, that has been driven by technology innovations, new ideas and entrepreneurial initiatives.5. Effective Risk Evaluation
Risk is always a core component of financial system today, Cyberattacks and security threats that spread losses across firms and markets have become more frequent and sophisticated. Diversified and decentralized architecture of FinTech services can help in mitigating the risks. Blockchain technology
, Big data processing, Artificial Intelligence powered chatbots and similar technologies makes it easier to cut down the risk of errors and frauds. Not only FinTech solutions strengthen the business models, but also ensures transparent workflows, improved overall resiliency and economic processes. Having an adequate understanding of operational risks inherent in the existing financial system and control framework deployed in predicting and mitigating risks would help in making a valuable investment.
As more and more businesses embrace digital disruption, financial experts are envisioning FinTech to take on the highly regulated space of financial services. FinTech companies
have a lot to bring to this economy and move the world forward. It is safe to say that the future of FinTech looks bright and it proves to be a promising year for all stakeholders involved.