Since its inception, Fintech was assumed to be an application of emerging technologies in the financial domain. But today, it is one of the major disruptors in the financial services market and has completely transformed the way people manage money. The domains that have seen the most disruption are asset management, lending, money transfers and mobile payments. Fintech has seen a steady growth ever since the dot com boom, but it was not until 2008, that the industry experienced massive global investments. It highlights that the financial sector is hit by a digital hurricane, disrupting and redefining the fundamentals of banking and finance.
- Not only has the digital innovation in Fintech set up new business avenues such as crowdfunding, online money transfer and lending services, but it has also reduced the reliance on banks as the primary source of funds.
- Crowdfunding is another interesting application of Fintech. Businesses can potentially raise money from people spread across the world. The underlying idea is that, an individual will share his cause and details of the objective over the web and anybody who relates to the cause can start donating.
- In the past, starting a business meant borrowing funds from the bank, manually filling in the documentation, or opening an account if necessary, and waiting for disbursement. Likewise today, the same objective entails applying online, getting verified online, and getting paid online.
- Instant money transfer is also one of the key application of the Fintech service sector. Individuals can make payments ranging from small amounts to huge sums in a fraction of minutes through channels such as Paypal. These channels function differently than the traditional banks, here the individuals who are willing to transfer the amount do not have to qualify with a minimum transaction value. Fintech has facilitated international money transfer as well, overriding the border constraints and international regulations.
Customers’ today are technology savvy and manage most of these service offerings through mobile applications, and it’s not far when a cashless economy with digital wallets will dominate. Although this just seems like the start of the Fintech revolution, it will be interesting to see what new technologies and opportunities will emerge in the future.
Reference: http://www.readitquik.com/articles/fintech/getting-fintech-righta-beginners-guide/