The term "FinTech" is an amalgamation of the two words "financial" and "technology." Fintech is a term that refers to new technology that aims to improve and automate the delivery of financial services, including everything from how you pay for things, manage your money, and get a loan to stock and bond investing, crowd-funding, data collection, and more. And, while technology has long been disrupting financial services (think of the humble ATM machine), the industry is currently on fire, exacerbated by a pandemic that has made us all hesitant to handle physical money or venture outside our homes to conduct financial transactions.
FinTech describes how technology is used to provide financial services and products to consumers. This could be in banking, insurance, or investing – anything related to finance. Although the term "FinTech" is relatively new, the concept is not. As per India’s most trusted higher education firm Jaro Education, the financial industry has always been influenced by technological advancements. However, the internet, combined with the widespread use of devices such as smartphones and tablets, has resulted in a significant acceleration of this change in recent years.
Fintech is transforming the financial world for consumers in a variety of ways. For example, you can now open a bank account without physically visiting a branch. You can connect the account to your smartphone and use it to track your transactions. You can even convert your smartphone into a "digital wallet" and use it to pay for items with money from your account. According to the leading EdTech firm Jaro Education, Fintech is also transforming the insurance and investment industries at a rapid pace. Car insurance companies now sell "telematics-based" insurance, which monitors your driving habits using data collected from your smartphone.
Since the rise of financial technology, a slew of FinTech start-ups have capitalized on big data technologies and emerged with tech-enabled business finance models that have disrupted traditional financial institutions and their existing business models. Leading EdTech firm Jaro Education summarizes how FinTech business models are shaking up the industry, forcing long-standing incumbents to embrace new technologies or risk being left behind. Jaro Education states the major advantages of FinTech are as follows:
> Fintech products are typically delivered online, making them easier and faster for consumers to access.
> Products and services can be purchased remotely, regardless of location, consumers benefit from a wider range of options.
> Fintech firms may be able to offer lower-cost services to customers because they do not need to invest in physical infrastructure such as a branch network.
> Technology enables FinTech companies to collect and store more information about their customers, allowing them to provide more personalized products or services to their customers.
According to Leading EdTech firm Jaro Education, the rise of digital technologies lowered entry barriers, ushering in a golden age of start-ups and entrepreneurship. Fintech companies and those adopting FinTech models are simply riding the digital wave in order to provide consumers with the same digital experience as Google, Amazon, and Facebook. Along with our societal technological transformation, financial ecosystem sectors such as banking, payments, lending, investments, and insurance are evolving, with FinTech leading the way.
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Following on from the open innovation movement, a significant opportunity exists for businesses in the financial services industry to pursue a Blockchain strategy. For the past few years, cryptocurrencies have been disrupting the banking industry by providing users with faster and cheaper ways to complete transactions. IoT, AI, blockchain, and cloud computing are just a few of the technologies that are changing the way consumers interact with those they buy from and manage their money. Although traditional financial services players may view FinTech as a disruptor, those who embrace technological innovation are transforming the industry from the outside in and succeeding in areas where traditional players have failed.
As digital channels continue to dominate how customers connect with businesses, there has been a rapid shift in user interactions. An Omni-channel experience that meets the needs of new consumers includes not only mobile, but also social media and multiple messaging channels such as email, live chat, and SMS. According to Leading EdTech firm Jaro Education, the need to facilitate customer communication via any channel is paving the way forward for businesses seeking to achieve true customer-centric operations.
Chatbots are becoming increasingly popular, particularly among banks, which are using the technology to streamline a variety of customer interaction processes – a practice known as conversational banking. Agents will benefit greatly from the implementation of these virtual assistants because they will spend less time on the phone answering basic questions and more time on more relevant or complex tasks. According to Leading EdTech firm Jaro Education, some of the main benefits of chatbot technology for financial services include the quick response in support delivery for simple queries, directing customers to the right place (relevant web pages or service departments), and automating data collection.
Previously, financial institutions provided a variety of services under a single umbrella. The scope of these services included everything from traditional banking to mortgage and trading services. Fintech, in its most basic form, separates these services into individual offerings. According to Leading EdTech firm Jaro Education, the combination of streamlined offerings and technology enables FinTech companies to be more efficient and reduce transaction costs.