Importance of Fintech in Financial Services

Advanced technologies such as artificial intelligence, machine learning, big data, blockchain and internet-of-things are taking over the traditional banking system at a fast pace. 

Fintech software development has changed the landscape of the whole banking industry. In fact, it has not only had an impact on the banking sector, but also on businesses and the economy as a whole. 

Changes in the business and workflow processes are transforming every commercial and professional industry. Today, we will be discussing what fintech is, and what benefits it offers.  

What Exactly Does Fintech Mean? 

Financial technology, or in short; fintech, is an emerging industry that uses innovative technology to improve financial activities. The technology allows traditional institutions like banks to enhance the way they manage their finances and services. Fintech not only involves money digitalization but also data monetization for it to fit into the digitized world. 

The Importance of Fintech in Financial Services

Read down below to find out how fintech software development is impacting the banking industry,

• It is Universal

Thanks to today’s amazing technology;especially the internet, it has become so much easier for people to access financial services. Regardless of where you live, or where your company is located, all you need is the internet to get access to Fintech services.

According to a survey conducted by EY Global, more than 56% small to medium sized businesses are making use of payment and banking fintech services these days, whereas 46% are using financing fintech services.

• Its Cheaper

This might come as a surprise to some. Since fintech is a relatively newer technology, people expect it to be costly. However, as compared to solutions offered by retail and traditional banks, fintech services and solutions are much more cost-effective.

According to Donna Fuscaldo, a cryptocurrency and fintech journalist at Forbes has stated that even though conventional banking also allows customers to access their services online they “are not on the cutting edge of customer-friendly technology and they are still dependent on the fee they charge.”

She further added that both; new and old Fintech banks “are aiming to make your banking life easier and more customized, at a lower cost in fee.”

• It's More Secure

As compared to traditional banks, fintech services provide better and stronger security. As compared to fintech, traditional banks are quite slower to adopt cyber security measures, which is forcing more people to opt for fintech app security solutions as they provide users more peace of mind.

However, it's possible for traditional banks to improve their security foundation by partnering with Fintechs. According to Chris Skinner, chairman of the Financial Services Club,“By partnering with fintech startups, banks will give their account holders the right measure of security and speed. Account holders can know that their money is safe, and they can enjoy the latest financial technology. This is the way to become a digital bank.”

• It Empowers Small Businesses

A few years ago, big businesses were the only ones that were using the latest financial tools and technologies. However, that has changed with time. Thanks to the custom fintech software development services, nowadays, even small businesses can use the majority of the tools that the big boys utilize.  

Whether it's using QuickBooks or Xero for managing your accounting, or processing payments through Stripe or Square; its possible for small businesses to expand their boundaries and operate with enhanced efficiency through the use of fintech products.

According to Peter van Mierlo, the CEO of the Dutch development bank FMO, “Fintech has a key role to play in reducing poverty, creating jobs, increasing gender equality and improving food security. It will also provide better data and as a result, decrease the perceived risk profile of the frontier countries which will lead to more capital for the underbanked. In short, Fintech can bring economies to life.”

• It Enhances Financial Capability

Whether it's our investments or personal finances, thanks to fintech it has become much easier for people to manage their money. Stat-ups in the fintech sector such as Chime and Robinhood are not only fueling the development of effective financial tools, but are also increasing awareness about financial literacy and education. The more educated people are at managing their finances, the less likely they are to fall in a debt spiral. 

Takeaway

Fintech software development has the potential to change the whole landscape of the banking industry. Looking to hire fintech software developers? Get in touch with Invozone today.