Fintech is empowering the world with new-edge solutions for you. You can use apps to check your balance, seamless transactions instantly, and other vital services. Individuals or companies using fintech can do anything from tax calculations to the evaluation of the market, and without the need for any prior financial experience. Fintech performs special operations like payment processing, transactions on eCommerce websites, automatic bookkeeping, and other programs that support the financial process of the country securely. Numerous firms are turning to fintech to offer features such as contactless mobile payments, UPI options, and other tech-driven transactions. This blog is a reminder for all those who don’t know how Fintech works and what are its examples.
Table of Content
1. What is Fintech?
Fintech is a phrase that combines finance and technology and offers almost all types of financial services from businesses to consumers. Fintech refers to any business that is capable of offering financial services via software or other technology. It might range from apps for mobile payments to bitcoins and cryptocurrency.
As we know that Fintech is a large umbrella term that covers and connects with almost all types of financial services via the internet, mobile devices, software, or cloud services. Many fintech products built by financial software development companies aim to link customers’ finances to technology for ease of use. But the term can also refer to business-to-business (B2B) solutions. Fintech originally referred to the technology used in banks or other financial organizations’ back-end systems. However, now it has subsequently expanded to include a wide range of other uses.
There are a plethora of custom applications that are developed for businesses to make use of financial technologies wisely. We must see these fintech examples, and how each of them is set to make a difference for companies.
2. Leading Fintech Examples
2.1 Digital Lending and Credit
Today’s global economy is completely dependent on payments and payment-based applications. There are many stakeholders who are playing an active part in the development process. Issuers, payments, processors, networks, and merchant acquirers are all heavily investing in shaping or advancing their payment systems. They leverage multiple advancements in technology to match industry-specific customer preferences and business requirements. Banks gain a lot from digitalization with the lending process in a variety of ways. This can include enhanced decision-making, improved client experience, and significant cost savings. It’s also a difficult and time-consuming task.
Digital lending is a technology that enables financial organizations to increase production and loan profits while also improving service at the point of sale (POS). It allows potential borrowers to apply for loan products from anywhere in the world using any internet-capable device.
Digital lending is not a new or unfamiliar practice, and financial institutions are well-versed in the fundamental premise. That idea, though, is becoming more complex as the technology innovates and the needs of customers get modified. Customers want banks to process applications quickly and make decisions quickly. Ordinary paperless services are now normal, and traditional banking institutions must keep up by offering customers digital financing methods that go beyond the norm.
2.2 Crowdfunding Platforms
Crowdfunding is another fintech example. Crowdfunding is the technique of raising money from a large number of people or organizations to sponsor a new project. Crowdsourcing platforms allow users to send and receive money from others on the platform, allowing individuals or corporations to aggregate funds from a range of sources in one area.
Instead of going to a typical bank for a loan, a project or company can now go straight to investors for funding. Crowd funders frequently use social media to promote their platform or idea in order to encourage people to contribute to the crowdfunding campaign.
There is a consistent back-and-forth process between entrepreneurs and investors. With the use of crowdfunding, it is avoidable. Rather than waiting for an opportunity to present their product concept to a group of investors, entrepreneurs can take their offer to the general public and seek funding from those who are interested.
The number of crowdfunding platforms has grown over time, with applications ranging from family and friend fundraising to fan and patron funding.
2.3 Mobile Banking
One of the most prominent and probably most widely used financial technology is mobile banking. Mobile banking apps can alert you whenever you are going extra, like spending more money than you should or have in your account. It is driven in a way that it turns the account into savings on payday and allows you to establish spending limits on the cards. The app is designed in a way that it can send you fraud alerts, and let you call a customer service representative by touching a button in a bank app. It can also let you transfer an amount to your pal. Customer service and support are provided by the best mobile banking apps via self-help, phone, live chat, and/or other channels. Nowadays, financial institutions are continuously growing and evolving their mobile banking capabilities by keeping up with the latest consumer needs.
In this regard, multi-factor authentication with safe sign-in options with bank account details and current technologies like biometrics, fingerprint readers, facial recognition, codes, and more make the sign-in process easier. Users should be able to have a safe mobile experience by using mobile apps that provide the highest level of security. Customers will be able to contact the institutions more easily if they have any problems or questions. Customers would undoubtedly want assurance that their personal information is well-protected.
Another must-have feature is the ability to make digital payments, which may be at the top of most customers’ wishlists. In this paperless era, every mobile banking app should provide quick access to many digital payment alternatives, mobile wallets, UPI, and other services.
RegTech is one of the fintech examples. It was the year 2008, the year of the financial crunch, and that’s when the financial world was in disarray. Lehman Brothers had collapsed, Fannie Mae and Freddie Mac had been taken over by the government, and money-market funds had gone bankrupt. Nothing was there on point to get backed on. So to revive the public’s trust a new technological advancement called ‘RegTech’. It was born to address issues relating to money laundering, compliance and managing regulations directives in the financial sector, terrorists’ financial rights/regulations, and much more. They designed a product that uses big data, artificial intelligence, cloud computing, and SaaS technology to help companies abide by regulations efficiently and in a less expensive fashion.
RegTech assists Financial Institutions in improving risk management by studying patterns and managing massive amounts of financial data. A RegTech solution ensures that a company’s regulations and compliance procedures are kept up to date.
2.5 Robo-Advising and Stock-Trading Apps
Heard of a bot assisting you via telephonic IVR or guiding you on a website for what you want on the website or from the company? Yes, they are bots, in short, that do Robo-advising for customers. In effect, Robo-advising has increased portfolio management’s efficiency while also cutting costs. Financial advisers may now evaluate many portfolio possibilities more quickly and efficiently, 24 hours a day, seven days a week. There is nothing as surprising as to see that a large number of Robo-advice providers have suddenly started to offer services.
Robo advising has changed the asset-management industry. Smart algorithm technology is used by this unique fintech business to deliver intuitive asset suggestions. The introduction of stock-trading apps is another popular and highly inventive fintech contribution.
Previously, investors had to physically visit stock exchanges to buy and sell equities. Investors may now trade stocks with the touch of a finger on their cellphones, thanks to stock trading tools. Investing has never been easier, thanks to the availability of low-cost and low-minimum stock-trading apps.
2.6 Blockchain and Cryptocurrency
The most common meaning of blockchain is that it is a decentralized, distributed ledger that keeps track of all the records and maintains their digital assets. This distributed digital ledger Technology (DLT) makes the background of the digital asset area unmodifiable, secure and transparent.
One of the best analogies to understanding blockchain technology is a Google Doc. You know how to google doc functions, it allows you to create a document and share it with a group of individuals. Instead of working hard in making duplicates of the same file or transferring, the document can get corrupted due to multiple access needs or even disseminated. This provides a decentralized distribution chain in which everyone has always and simultaneously has access to the document.
Similar is the case with Blockchain. There is a serial number attached to each block of the chain. None of the blocks can be easily accessed even if they have the key of the first and next blocks, still, the blockchain will not allow breaching any information from any of the blocks. Nobody should shut the changes while another party needs to make a change in the document. Here, tracking of all modifications is in real-time, making them completely transparent.
Cryptography is used to safeguard transactions in any type of currency that exists digitally or electronically. Cryptocurrencies lack a central issuing or regulating authority, instead relying on a decentralized system to track transactions and create new units.
Cryptocurrency is a type of digital currency that does not rely on banks to validate transactions. It’s a peer-to-peer payment system that allows anyone to send and receive money from anywhere. Cryptocurrency payments only exist for digital inputs to an online database describing specific transactions, rather than being tangible. The transactions of money can be traded in the real world. The public ledger is used to record the transactions, the moment you move cryptocurrency funds and for digital wallets, cryptocurrency values can be used.
Payments now have a different meaning now as it not just revolves around bank transactions but it is much more than that. Sending and receiving payments is one of the most convenient aspects of Fintech. It is one of the most vital examples of fintech. You as a business can do everything using the functionalities of fintech. When you use cryptocurrency, electronic money transfer, or other methods to conduct a transaction between two people is considered a payment.
There is a transformation in the payment process thanks to the latest innovations in online payment gateways, which have made them more simple, easy, fast, and accessible. Payment gateways have eliminated the need for a bank to be involved in digital financial transactions. Payment gateways have provided consumers with significant benefits and savings by eliminating costly bank fees.
Mobile payment has evolved into one of our most basic needs. Mobile payments have also had an impact on currency exchange rates. Many small and mid-sized firms had to contend with unfavorable currency rates prior to the emergence of Fintech.
Insurance and fintech coming together from Insurtech. Fintech firms are collaborating with traditional insurance firms to automate the entire process, allowing them to increase claim coverage. Insurtech is a technology developed in the insurance industry to maximize savings and efficiency using industry-based insurance models. Insurtechs are consistently improving the user experience in a variety of ways. By reinventing long processes, claims processing, and frequent activation. Insurtechs, in particular, enable businesses to provide customized insurance services while also ensuring data security. It streamlines the insurance process by allowing users to file claims and manage policies online.
3. Closing Words
The finance sector is overwhelmed with technological advancements, it has every day a new innovation making a difference in their process. In summary, Fintech and its diversified advancements have made the entire finance fraternity process data and financial information smoothly and securely.
All of these advanced applications are focused on identifying flaws and eliminating them so that the end results are more accurate, secure, and reliable. Fintech innovations have made the overall process less painstaking and more fruitful. If you are a business that hasn’t tried its hands on fintech, then there is so much you are missing out on. Trust the industry innovation and take up the benefits of the aforementioned fintech examples.