FinTech, or Financial Technology, is a financial industry that applies new technologies to financial and investment activities. The word FinTech is a compound term that comes from joining the first syllable of the words Finance and Technology, meaning that it is a word that arises from the union of two and brings together all those financial services companies that use the latest technology to offer innovative financial products and services. Jason Simon, a FinTech and global eCommerce expert, explains in more detail how this technology can be used to improve the development of international trade.
FinTech companies are dedicated to intermediating in the world of finance in multiple aspects, in money transfers, loans, purchases, and sales of securities or financial and investment advice, to name a few areas in which multiple FinTech companies are appearing. Simon explains, “Technology and social networks are the most efficient lifeline we can use, not only to overcome these moments of isolation but also to be competitive in the new normality that is coming, so, as a business owner, you must undertake, reinvent yourself and adapt using all possible resources, in this case, FinTech, to achieve success.”
One of the advantages of FinTech and electronic payment platforms is to achieve more conversion and more transactions, which is the gasoline of eCommerce. According to predictions by eMarketer, by the end of this year, we will go from $1.9-$4 trillion of retail consumption through electronic payments alone, which is why this is such an important opportunity.
“In the midst of this COVID-19 pandemic, FinTech is becoming a viable and necessary option for small businesses to access credit, and their use has great advantages over traditional financial services, such as fewer requirements and lower interest rates,” Simon adds.
Automation is a great benefit that many business owners can take advantage of, since it is clear that financial technology makes you more efficient. The vast majority of FinTech companies work under the SaaS (Software as a Service) model, a scheme that allows automating costly processes for companies. This automation is a great advantage for small businesses since the processes, costs in people, time, and skill hours invested in it are better used in other more strategic and important processes for the operation.
The flexibility that can be gained from this technology can play a crucial role, as well. The rigidity of traditional financial institutions makes the process of applying for a loan a nightmare. With the advent of FinTech, specifically P2P (Peer to Peer) lending platforms, this management is streamlined and no longer requires the intervention of third parties. In other words, this type of technology builds new, more agile workflows and, therefore, makes it possible to save data, carry out operations through alternative financing and much more.
Something that will never cease to be relevant enough is savings, and with FinTech, this aspect can be improved. The fundamental objectives of FinTech initiatives are to offer new financial services with the support of technology, to add value to current services, to provide products and services exclusively online, and to efficiently reduce traditional costs. These objectives offer advantages that have given the sector: more efficient management, time savings, and immediacy.
Other benefits of FinTech are also driving new businesses of all kinds, boosting technology globally, and promoting a local economy highlighted with the right players. Locally, it is usual to add value in terms of how money moves and culturally changing attitudes. Simon states, “At the end of the day, the goal of FinTech should be to implement borderless trading arenas, where everyone who previously had no opportunity to take advantage of financial services finds a place.”