You may have read and heard a lot about Fintech recently. It is affecting many industries in one way or another. But what’s all the buzz about? What is fintech?
Fintech comes from a combination of the words “financial” and “technology.” It relates to all of the new technology and innovation in the finance industry. The new Fintech tools work with traditional ones to provide improved financial services. For example, years ago, money transfers were only performed inside banks. Wait times can peak during certain hours making it even more of a hassle. Now, one can simply transfer money through an online checking account (e-checking) in seconds.
The term FinTech was first introduced at the beginning of the 21st century. It originally referred to the technology used at the back-end of well-known financial institutions. Previously, access to financial services was considered a privilege. Now, banking and finance have merged to form a global platform. Hence, individuals have more control versus their financial institutions. In addition to financial institutions, fintech has transformed retail and online investments.
Fintech in Business
According to the 2017 report by EY, a global leader in knowledge management, FinTech is being used all over the world. Fintech business adoption rates range from 14% in Japan to 33% in the United States, to 69% in China, to mention a few. As a result, its popularity has also increased in the last 2 years and there is evidence of awareness going from 62% in 2015 to 84% in 2017. This is one of the reasons that there is so much buzz around fintech in the last couple of years.
Industries Using Fintech
There are three elements that make Fintech useful: its simplicity, transparency, and personalization.
Sending money and payments are one of the most popular categories for fintech. The average online user transfers money weekly. Users feel more comfortable handling these transactions on a secure site that allows payments to be completed. Either with a credit card or with payment services such as PayPal.
Services like PayPal provide almost immediate approval, and may even include a confirmation email sent in a matter of seconds. This feature makes transactions faster and easier. Businesses are able to keep better track of their transactions, bookkeeping and order processing.
Transparency means security and safety for the end user. Fintech allows investors to gain access to full business operations reports and financial statements with full disclosure. Additionally, consistent updates also allow users to stay up to date on their investments.
At DiversyFund, we are proud to provide these tools to our investors. We are always looking for ways to give our investors more transparency and security. Hence, as one of our investors, you are able to login to our platform and take a close look at your investment progress. Click here and watch our Chief Investment Officer, Alan Lewis, discuss how we are providing this level of transparency to our investors.
Fintech tools are smart enough to remember preferences. This makes it easier to log in, out and manage several accounts at once. The financial tools fintech offers are extremely easy to navigate, even for beginners. As fintech continues to evolve, more people are now gravitating toward these new financial services. Moreover, services such as online banking for personal and business accounts use fintech tools due to their transparency and accessibility.
Managing Life with Fintech
According to the 2017 EY study, 13% of consumers who use fintech use 5 or more of these services. If you are a business owner, you should be paying attention.
Furthermore, these are the percentages of digitally active consumers who are using each product:
- Insurance: 24% of consumers use fintech tools while seeking car insurance, comparing online insurance premiums. Additionally, they monitor their activity-based health insurance.
- Savings and Investments: 20% of consumers are using fintech platforms to invest in stocks and rewards-based crowdfunding. Which support a for-profit business as well as non-profits. Rewards-based crowdfunding offers some form of incentive for participation.
- Financial Planning and Lending Money: 10% of consumers are using Fintech platforms to complete peer-to-peer borrowing, as well as online short-term loans. Many fintech tools are very user-friendly. This makes it easier to set a budget and actively use financial planning tools.
Fintech in 2018
To conclude, it was an exciting and interesting year for fintech in 2017. Finally, InsurTech is also on the rise, there is an increase of fintech in the insurance industry. These offer a higher degree of customization in offerings backed by solid consumer data. This will help better predict consumer behavior.
At DiversyFund, we are proud to be one of the real estate crowdfunding investment platforms that provide users with the best of fintech. Our real estate crowdfunding investment process is easy to access and easy to use. It is transparent at each and every step of our development and personalized for each investor.
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