What are fintech, and how are they revolutionizing finance?
We live in a digital world that is advancing by leaps and bounds, so the demand for new forms of digital payment has also increased. To solve this situation, many companies have appeared that offer this type of service and are known as fintech.
The use of these has become quite common, they have become an excellent way to access electronic payments, even for those who do not have bank accounts.
In this article we are going to talk to you about everything you need to know about fintech and how they really work.
What is a fintech?
Fintech is a word that comes from the abbreviation of the words "finance" and "technology" and is simply a company that implements digital technologies to improve financial activities.
So, we have that this term is used in order to encompass a series of companies in the technology sector that seek to improve financial services. These can be both small, medium or large companies that decide to enter this world.
These companies in one way or another seek to innovate in order to provide a service to their customers. These services are related to money management and payment services.
It is not a new term, however, in recent years we have seen a large increase in the number of financial companies. And it is that with the boom of the network and electronic commerce, people are looking for simple and easy-to-use payment alternatives.
Although there are services of this type all over the world, it is in Europe, China and the United States where they have probably been most successful. And it is that in places there are numerous companies offering various financial services.
What is the goal of a fintech?
As you can imagine, these types of companies They have several objectives and all of them are aimed at providing financial services. Next, we will tell you what the main objectives of one of these companies are.
They seek to offer new financial services to people.
They add value to the financial services that currently work.
Optimize current service costs.
They allow people to have greater access to financial services by expanding the offer. In addition, they do not usually require paperwork as is the case with current banks.
Use technology to try to solve the problems of people and companies.
They allow payment between people and businesses in a simple way and reducing the cost of transactions.
How do fintechs work?
As we already mentioned, fintechs seek to be an alternative to traditional banking by democratizing access to payment methods. In this way they seek to bring all these services to end consumers to respond to their needs.
So, the operation of a fintech is based on bringing its financial, accounting and economic services to everyone who needs it. These use web platforms or mobile applications to reach end users.
Additionally, they seek to make their customers' lives as easy as possible with flexible and versatile payment options.
In which sectors do a fintech operate?
Fintech companies operate within the financial sector, but they cover many categories. Next, we will talk about what are these sectors in which fintech companies can operate.
Crowdfunding.
Mobile banking.
Foreign exchange market.
Risk management.
Payments and transfers.
P2P loans.
Insurance.
Trading.
Financial advice.
Safekeeping of funds.
These are the main sectors within which these fintechs usually operate, however they do not have to be the only ones. In addition, due to the fact that new companies of this type appear from time to time, some can innovate in a new sector.
Can anyone start a fintech?
Fintech has become quite a profitable business in recent years. This has led to an increasing number of people interested in the sector.
The creation of a fintech is not easy, nor is it cheap, since you will need trained people to develop the platform. However, if you have the necessary capital or are able to obtain it through credits or crowdfunding, you will be able to do it.
Depending on the country in which you find yourself, the legal issue can be easy or complex. In this aspect you should consult with someone who dominates the subject. In some places there may be no laws regulating fintech, this makes the process easier.
Generally speaking, anyone with enough resources is capable of starting their own fintech. It is also important to have an idea that adds value in the financial field.
Examples of some fintech in the market
There are a lot of fintech operating in the market, this makes it worth mentioning them all. However, we are going to name some fintech that can serve as an example:
Fintonic : This is a personal finance application born in Spain and is responsible for offering a virtual bank account and a debit card. This allows people to access a fully functional bank account in a simple way.
Mercadopago : This is a payment platform that is really popular in Latin America. This allows payments between people and businesses. It operates in many countries and is a perfect payment method.
PayPal : There is little to say about PayPal, it is one of the most widely used online payment methods around the world.
eToro : eToro is a platform for trading of different financial instruments such as currencies, cryptocurrencies or shares.
Uala : This is an application similar to Fintonic, but this one was created in Argentina. Similarly, it offers a Mastercard prepaid card to make purchases.