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The Fintech Transformation 2023: Revolutionising Finance with Cutting-Edge Innovation

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What Is Fintech

The term fintech is an abbreviation of  financial technology. The purpose of fintech is to use new technology to improve financial services and make the financial process for businesses easier, automated, and more secure. Banks and investment firms have used fintech since the early 2000s, but we only really started using it as consumers in the last decade. The term financial technology is comprehensive and may be vague in definition. A simple example of fintech is digital wallets like Paypal and Payoneer.  

The Impact of Fintech

Technology impacts every aspect of our lives, from how we work to daily tasks such as cooking and exercising. When we speak of financial technology, it is limited to banking and investment processes. Even though the main focus of fintech companies is to change the traditional way of banking, their technology has also revolutionized the way we do other things.

Gaming and Gambling

If you are an avid gambler or occasionally play poker online, you will know and appreciate the successful collaboration of casinos and fintech. Fintech in the digital gaming space has improved the number of payment options and facilitated faster transactions through digital wallets and cryptocurrency. Using these fintech platforms has also enhanced safety features, making for a more secure and enjoyable gaming experience. 

Funding

Entrepreneurs know one of the biggest challenges in growing a business is access to funding. A lack of capital has caused many companies to close down, and some people simply don’t start their own business because of a lack of suffiecient funds. Previously, the only way to access funding was through a bank loan or private investment. Peer-to-peer fintech lending platforms like Prosper Marketplace, Upstart, Debitum, and Mintos offer funding alternatives to start-ups and business owners.  

Investments and Trading

AI investment apps like Robinhood and Acorns allow you to take part in stock trading for as little as $5. Some apps let you choose the stocks you want to invest in, while others let you select the kind of portfolio you want. It’s all dependent on the algorithm of the app you choose. You can access live information from Wall Street, practice trading on a dummy account, and ask questions directly on the app. Trading on these apps is convenient, easy to understand, less risky, and cheap. Most of these apps offer fee-free and commission-free trading for smartphone users.

Business Processes

When running a business, a lot of time is spent reviewing financial records and tracking and monitoring cash flow. All this falls on you if you are a solopreneur or can’t afford an accountant or accounting department. In such cases, cloud-based platforms like Planergy become indispensable. The platform stores and tracks your financial data through artificial intelligence, and because it’s cloud-based, your data is secure, easily accessible, and up to date.

Without fintech software, we wouldn’t have online stores like Amazon, or those digital-only banks we see popping up everywhere. 

Consumers

In an interview with Ellen Degeneres, Oprah mentioned how she went to the bank for the first time since 1988 to deposit a $ 2 million cheque. While we are not all multi-millionaires with 100 people on staff to do things like banking, this shows the power of fintech. When you think about it, when was the last time you had to go to the bank? Most of our queries can be handled on the bank’s app or website. 

And as the fintech sector grows, things like credit and mortgage applications can be done on our cell phones. Companies like Better Mortgage are striving to simplify the mortgage application process to a digital-only offering. This is great for saving time and the environment since it is entirely paperless. 

According to a Plaid Fintech Survey conducted in 2022, fintech helped people feel more in control of their finances. More than 60% of people felt that financial technology has helped them deal with economic difficulties better. Fintech goes beyond saving time and being convenient; it has become an invaluable tool in our daily lives. 

The Future of Fintech

In the same way, coding has become part of education. Higher education institutions now offer fintech qualifications. Students can learn the conventional specifics of finance and management as well as the technical skills of financial technology. 

There are over 25,000 FinTech companies worldwide, with the USA having the most start-up fintech companies. Between 2018 and 2023, the number of fintech companies has almost doubled. These figures indicate that the sector is still growing, and is expected to do so for the next five to ten years, until the sector reaches saturation. In the meantime, these start-ups are solving legitimate problems that have plagued the financial industry for years.

The use of innovative technology in the financial sector is not only about convenience, but inclusion as well. Fintech companies have opened up a world of banking and investment to people who would not have been able to partake before. For example, there are over 350 million without bank accounts in Africa, yet over 600 million people have access to a mobile phone. With innovative financial technology, these unbanked people are no longer limited to just cash transactions, and can buy goods and services online as well as send and receive money.. 

In turn, fintech companies such as Tala offer consumers with poor credit or no credit history lending solutions. A $500 loan for a struggling individual in a town in Nigeria can translate into a farming enterprise or sewing business. In the right hands, fintech can help alleviate poverty globally. 

With all this information in the palm of our hands, data privacy has become a significant concern for financial regulators globally. A data breach could end any fintech company, so they have to ensure strict measures to protect their customers’ data.

Lastly

Fintech has been labelled a ‘disruptor’ to the world’s financial systems, and rightly so. Fintech companies have made financial management less scary and wealth creation more accessible. Unsurprisingly, fintech funding was over $50 billion last year. Considering that Gen Z is in the job market and the next Steve Jobs and Warren Buffet will come from their generation, fintech is here to stay. 


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The content of this website is for informational purposes only and does not represent investment advice, or an offer or solicitation to buy or sell any security, investment, or product. Investors are encouraged to do their own due diligence, and, if necessary, consult professional advising before making any investment decisions. Investing involves a high degree of risk, and financial losses may occur.


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