Understanding Fin tech: What is It and How Can You Benefit?

Digital transformation has brought with it a lot of buzzwords that are being thrown around a lot during one period or another.  Fin Tech, short for financial technology, is one of those terms that have been used around much recently. But for many consumers and businesses, it’s not just a buzzword thrown around, but a big business opportunity or a way to make the financial side of t their lives more comfortable.

To clear up for you what Fin Tech actually is, in this article we take a deep look at what it is, how it’s used, what are the potential opportunities and hardships, as well as consider some vital statistics.

Let’s jump right in. 

FinTech in Practice

If you’ve ever transferred money to someone via your smartphone or computer, ordered something, paid online, or shopped on the Internet, then you are a part of the rapidly growing, multi-billion dollar industry known as Fin Tech. 

Seems simple at first, right? However, FinTech is not limited to one thing, but rather includes a wide range of products, technologies, and business models operating in the financial sector and changing it. This includes everything from cashless payments to money transfers to crowdfunding services and even cryptocurrencies. 

Fin Tech in Money Transfer: Opportunities and Challenges

Investment into Fin Tech has grown nearly 10 times since 2010, reaching $98 Billion in 2021. The main reason for this rapid growth is the consumer adoption scales: 90% of consumers know at least one fintech service provider, and 64% of consumers have used 2 fintech products in 2019. 

The COVID-19 pandemic has speed up the digital transformation of many industries, and fintech wasn’t an exception. Due to the increase in cashless payments, online shopping, as well as interest in cloud services, the fintech industry has been growing by leaps and bounds during the last two years, registering 12% annual growth. This expansion is expected to continue, and the annual revenue of the fintech sector is expected to grow to $188 Billion in 2024.

This rapid growth, of course, doesn’t happen smoothly. The growth of Fin Tech brings with itself many opportunities for businesses, but also many challenges.

Opportunities and Benefits.

Mobility

– The opportunity to make transfers using a smartphone even on the go is a powerful tool that makes Fin Tech so appealing to a large number of users. Here’s a number: by the end of 2022, mobile transactions are expected to grow by 121%. As banking on the go becomes a customer behaviour, more and more financial institutions will need to incorporate it into their operations. While this may seem like a tedious task at first, it’s a great way to improve customer engagement with the bank, loan company, or the money transfer service, and improve loyalty.

Improved ways to use financial data

Big data enables financial institutions to gain greater insights into their customers’ needs and preferences. This gives them better insights and understanding of how customers and businesses can benefit, and improve their services accordingly.

Crowdfunding

While the concept of crowdfunding is in itself not new, the rise of Fin Tech has given it unparalleled proportions. Now, through platforms like Kickstarter and Indiegogo individuals, social initiatives, and brands can reach larger audiences as part of their efforts to raise funds for their cause. 

Challenges and Concerns

Safety and data privacy

– As financial operations go increasingly digital, cyber-attacks and data breaches become bigger risks for consumers. Digitisation of data and automation of processes may put consumers at risk of data breach and loss of personal information.

Regulatory concerns

Financial industry is heavily regulated by governments. As more and more Fin Tech startups emerge, regulatory issues may arise both for the companies and the governments. The tech world is constantly evolving at a rapid rate, while policies tend to move more slowly. This creates a gap between the two that Fin Tech seeks to bridge by disrupting the financial world.

Key FinTech Statistics to Know

Fin Tech is a rapidly growing sector with far-reaching implications.
Knowing key figures and statistics of the Fin Tech world can help businesses make informed decisions about how it will affect them. Research has been conducted to provide essential figures and statistics for business owners to consider when evaluating Fin Tech’s impact on their operations.

• The number of FinTech startups grew three times in only two years
• E-commerce is one of the largest drivers of Fin Tech growth, with around 10-12% CAGR.
• Top fintech sectors are transaction value digital payments and personal finance.
• Asian startups received 40% of funding or $50.3 billion out of the total funding of the Fin Tech industry.
• By 2019, 25% of SMEs have already adopted one or another form of Fin Tech.
• Americas are leaders by the number of FinTech startups.
• Chinese and Indian consumers lead the way, comprising almost half of the Fin Tech customers.
• The global consumer adoption rate of fintech for money transfers and payments is 75%.
• China’s market adoption of FinTech is the highest in the world, standing at 87%.
• Blockchain, alongside reg tech (regional technology), are two of the fastest-growing segments of FinTech.

Summing Up

Financial services are highly sought after and digital disruption has had a major impact on the industry.
Technology and finance have become increasingly intertwined, making it difficult to imagine them as separate entities.
Small and medium businesses should invest in Fin Tech to increase revenue growth.