You’ve probably already heard of them, and you may even be much more familiar than you think with their environment, even if you don’t quite know what the term is all about. FinTech is here to stay. Every time you hear mention of platforms such as PayPal, the rise of Bitcoin, or the advantages of the new digital banking, for example, you are coming into contact with the so-called FinTech. As a whole, FinTech has advantages and disadvantages that should be clear, and Jason Simon, a specialist in this space, explains each of them.
FinTech comes from the union of the words “finance” and “technology.” Hence, it refers to financial services companies that use the latest technologies when providing their products or services, putting technology and money together. Since its arrival, many companies and startups have taken root in this sector, opening up a wide range of possibilities for companies in areas such as crowdfunding, online payment platforms, or digital loans, to name just a few examples.
The advantages of the FinTech industry are several and Simon has compiled the most important ones. First of all, it helps to save money. They say that time is money, and never better said. In this case, the possibility of carrying out procedures much faster and through automated processes increases the efficiency in the day-to-day of the companies (also at the user level). This also translates into visible economic savings.
“There is nothing more flexible than FinTech for the work dynamics that are beginning to take hold in companies today when trends such as teleworking are gaining momentum,” says Simon. “FinTech allows you to carry out all kinds of operations from wherever and whenever you want in a very simple way. For example, you can apply for a loan from home with just one click and without having to go to the bank.”
Democratization of access to financial products. With the rise of all the companies that have emerged in the heat of this scenario, the financial sector has become more inclusive, allowing access to a greater number of financial products to a much wider number of users. Everyone can now access certain services easily, at the click of a button.
Personalization and user service are also relevant. If there is one thing that FinTech products have been able to enhance, it is their ability to provide personalized attention to the particular needs of the user and the company. Most likely, if a user is able to detect a problem in his financial environment, there will already be a startup specifically designed to offer him a customized solution.
“Transparency is another of the trump cards that FinTech companies have played best against traditional financial services,” asserts Simon. “The application of new technologies, in addition to speed, has brought new ways of measuring and guaranteeing more transparent business management and financial offerings.”
Applied to companies, analytics is one of the most useful aspects. It is now much easier to collect data and information in a detailed way that allows truly effective analysis of certain processes. This necessarily leads to greater business efficiency and competitiveness.
On the other hand, Simon also wanted to refer to the disadvantages that can be found in FinTech. One of them is the feeling of lack of security. As with any virtual platform and everything that is managed over the Internet, there are certain risks associated with the rise of cybercrime in the use of these essentially technological products and services.
“You have to be clear that companies are working every day to fortify their security measures to prevent attacks,” states Simon. “Although there is also no guarantee that our data is one hundred percent protected using, for example, traditional banking.”
Despite the increasing level of penetration of FinTech in the business and financial fabric, there is still a large sector that is unaware of what they are, what their benefits are, and how to use them. This can lead to a certain hindrance in some business relationships, although it can also be considered a competitive advantage in certain cases and environments.