Why are more people using fintech?

The fact that businesses now tend to depend more on computers than human being is evident nowadays. The growth of automated technology is rapid, but why? We believe that it is due to the numerous advantages technology gives you, specifically computers, laptops, mobile phones and related gadgets. Some of them being that you get more accuracy, more advanced and rapid services, higher productivity and consequent efficiency and cost-savings, in most cases. Technology is prone to be common in many sectors, one of the most useful being in the financial sector. One of many reasons why our millennial generation loves fintech is because of the financial independence they experience, at least most of them. A cohort that has been literally obsessed by technology for their whole life, they now wish to have their banking and investment services to be as digitalized and seamless as their other services and commodities. We consider our predecessors as “boomers” because they valued in-person interaction and delayed processing over our quick sci-fi shenanigans. Hence, when we combine all of these reasons together, we get to see a statistical rise in fintech unlike any other. Fintech investment was around $20 Billion in 2015, which is about a 60% increase from the previous year, something to make a note of.


Examples of Fintech:


  • Banking Sector: 50 years ago, no one would have thought that you could transfer money without actually going to the bank physically. Surprise! Online transfers are pretty common nowadays, making transferring of money completely seamless. Yes, you got it completely right! This, right in front of you is the “fintech” world we now reside in. Every other bank has the mobile banking feature within it, with the access being free for all cases. Neobanks, also defined as online banks, or banks with no physical branch, have been entering the market. They have all of their services online. If you are someone with a creative mindset, get the right equipment and get started!
  • Cryptocurrency: a digital asset meant to perform financial transactions is known as Cryptocurrency. It uses cryptography to do so. Since there is almost no human interaction needed, this uses fintech as well. All of the programming and necessary duties are performed online. Crypto is starting to be extremely common especially in the 21st century, and as we move on, we have positive hopes from what it might offer us!


  • Investment and Savings: there are several online investment management applications, one of them named as “Nutmeg”, making it way easier for people in managing their funds along with their investment portfolios. Consequently, the shares of savings app hav been drastically increased over the last ten years. These apps are ready to do all of the complex work for you, and let you make the final decision.


  • Payments: the saying “I will pay you later” is now said as “I will Paypal” you later, via fintech. Paypal is one of the many apps that will let you make financial payments online. Your money can be sent all the way to any corner of the world in a matter of just a few seconds! Furtherore, if you are someone that owns numerous credit and/or debit cards, today there are applications like “Curve” which allow you to combine all of your cards into one, saving you hassle. 


  • Lending: with fintech, people can apply for loans within seconds. In addition to that, they can get advanced estimates of their credit scores with data points. A source, risk modeling, which can be helpful for lenders have also improved. Due to the process being transparent, consumers can request credit more than one time a year. 


  • Insurance: from mobile car insurance to health, all of the information about this industry is now available on your mobile phones and this industry is advancing day by day. The fact that it is still related with technology makes it under the umbrella of fintech.


Advantages of Fintech


  • Cost-effective methods: one of the most prominent ways of cost-cutting is by reducing the number of people employed. This is obvious because if you are increasing technological capital, you will eventually reduce human capital in order to gain efficient resource allocation. They also streamline most of the business operations and hence providing operating efficiency, lowering down the average and marginal costs of production.


  • Improvement in the decision-making process: this is where fintech is significantly helpful by providing graphs, charts, and other statistical data in order to make an important decision. In addition to that, resource allocation can also be optimized. Businesses can also know the most effective marketing strategies and hence can target their consumer base accordingly, instead of being in a haphazard. This way, businesses stay more focused and informed towards their target.


  • Introduction of transparency: fintech can help identify fraud, hacking and other malicious activity faster than a human. This is extremely important for your company’s safety and integrity. Fintech is making businesses safer, for producers as well as consumers, so it is a win-win situation. 


  • The advantage to the macroeconomy: these microeconomic practices can be extremely beneficial for the country's economy as more and more is invested in research and development. This increases the Gross Domestic Product (GDP) of a country along with Aggregate Demand (AD) as well, both of which have significant advantages. This way, an economy can be at a boom and can hence acquire macroeconomic benefits resulted from the microeconomic activity.


The growth of this industry is guaranteed, partly because of the improvements being made in technology day by day and partly because of the extreme dependence on financial services in literally anything today. Blockchain projects, for example, have the capacity to be a catalyst in the banking industry in the years to come. Long gone are those times where birthday cash used to be given in person, today, it is given through Paypal. The time has gone where we had to stay in lines to deposit a cheque because you can do that from the comfort of your home.