Are you confused about fintech? When a new product bursts onto the marketplace, it’s usually clear what it does and how it might change things: driverless cars, for example, are easy to understand and have predictable outcomes for lifestyles and the economy. Fintech, on the other hand, is something that many people would struggle to define.
Fintech means ‘financial technology’ and is a concept that refers to disruptive uses of software in the financial services industry. If you’ve noticed the term being used more frequently, it is because fintech start-ups are not only challenging established major companies, they are also bringing about a subtle transformation in the way we live and work.
The most typical fintech start-ups find a software solution to an everyday problem. Paypal was an early example; providing a secure payment system for online commerce. Other examples include TransferWise, which makes transferring money internationally cheaper and easier than using a traditional bank; or iZettle, which offers a low-cost card payment system for small retailers, operated through a normal smartphone.
Entrepreneurs have been seeking ways to streamline and improve every area of financial services, often using the power of big data to inform decision making. For example, peer-to-peer lending apps have been developed using algorithms which evaluate credit rating in a different way to the personal checks carried out by banks. Other start-ups are taking on heavily regulated areas such as mortgages – linking users, brokers and lenders in online platforms and apps.
Fintech innovation is something no established company can afford to ignore. Many companies are buying up start-ups to reap the benefits of their innovative software, valuable data or loyal customer base. Others are investing in in-house resource to maintain their competitiveness in the changing marketplace.
How is your company meeting the challenge of fintech? If you need to invest in up-to-date technical solutions talk to us about how we can help or click here to find out more about IT financing options.