What is financial technology?
Financial technology is a new technological innovation in financial services provided by various fintech startups and established fintech companies to disrupt the traditional method of financial services ( Traditional Banking system0. While most traditional banks (the banking system we’ve known) are yet to adopt this new/modern system of financial technology, some of the world’s top banks including HSBC USA have been developing their own financial technology.
Categories of Fintech
2.Loan Origination Software
4.Commercial loan software
5.Online Banking Software
Financial technology is a new innovation, though it has been there for a couple of years now, have not reached its maximum height because most people don’t understand its meaning, they think of financial technology as online scheme poised to taking money from them. maybe you will better understand if I tell you that mobile Apps, Cryptocurrency, etc are few examples of financial technology cryptocurrency have various terms such as Bitcoin, Ether, Blockchain, Virtual cash,luno, etc.
Fintech companies utilize a variety of techniques such as payment apps to more complex software Application e.g Artificial Intelligence and big data.
What is financial Technology?
It is a fact that the involvement of technology in any industry or services leads to an increase in efficiency, security, less workload, and costs. This is the same case with financial technology
Fintech is a more secure banking service, to an extent more secure than the traditional banking system, because unlike traditional banking, some financial technology terms like the cryptocurrency(note; am not advertising cryptocurrency )uses blockchain technology with trust and safeguards built into the platform while banks are no longer required as intermediaries.
Importance of Fintech
Fintech is Global
The fact that its services are available on the internet makes it a universally recognized method of banking, you can access them via mobile.
It is Economical
financial technology services are more affordable and economical compared to traditional banking. These are seen in the charges posed by both parties, you will notice that traditional banking charges more in their banking services.
It Encourages Crowdfunding
crowdfunding is simply a method of raising money from a large number of people who can contribute a relatively small amount of money via the internet.there are online fundraising, social media fundraising, peer-to-peer fundraising, GoFundme , YouCare
Fintech has changed the way people obtain a loan
fintech has made it easier for investors and businessmen including ordinary individuals to obtain a loan to carry out projects. Through this medium, people can fund campaigns online. Some countries like the UK have platforms such as the Crowdcube that support crowdfunding as a means of obtaining and raising money. The traditional system of obtaining a loan is a tedious task and can make one run into great financial risk.
Fintech has eliminated a third party in Digital Transactions
the cryptocurrency as one of the terms of fintech has platforms like bitcoin which have made it easier to buy goods and services, this is made possible because of software called blockchain (like mentioned earlier and the most trusted crypto company ). This blockchain software actually dictates the cryptocurrency bitcoin transactions as individuals/companies can make faster transactions without providing much personal information about them.
There are challenges facing the financial technology sector/industry, these challenges I can say has contributed more to the reason why financial technology has not been completely accepted and adopted as an official banking system of the world, there is still hope that in the future (world of tech),fintech would get its way. some of the challenges are discussed below.
CHALLENGES FACING THE FINTECH INDUSTRY
It is true that the fintech industry have changed the way people make financial transactions and is gradually disrupting the traditional system of banking and money management. However, the industry is facing many challenges and setbacks since its invention, some of which include.
The government of some countries places regulations on the activities of the fintech industry, some of these regulations as well sanction the temporary breaking of such regulations. This has really prevented the fintech industry from testing new ideas and reducing initial problems faced by the start-ups.
However,fintech industries can make friendly relations with the authorities in order to ensure smooth operation, this will go a long way to boost the innovators.
With the increasing number of cybercriminals who have continually been bringing up more refined and prolonged attacks, the number of the data breach has increased. Because of this, organizations have been devoting more time to tackle the issues of cybersecurity in order to thwart these attacks. According to reports, businesses spent an average of $11.7m on cybersecurity in 2017 alone.
One of the biggest disruptions for the fintech industry is the introduction of the General Data Protection Regulation(GDPA) with financial firms both start-ups and already established ones having to invest time and huge amount of money with the new laws.now the question is, what happens when a start-up doesn’t have money to invest in data security?
Misunderstanding of the concept of fintech
Most people are not educated about financial technology and this poses a great problem to the fintech industry. Because this is capable of preventing them from reaching their maximum potential. It is actually the responsibility of the financial industry to educate the masses about them, the underlying importance in leveraging financial technology for their financial activities, what they are for and why the masses should invest in it.
Moreover, most people have a wrong conception of fintech as most people see them as a make money quick scheme or a Ponzi scheme, still boils down to the fact that they don’t actually know what fintech is all about.