Technology will transform the financial services industry
The financial services industry is undergoing a massive change and this can be attributed to the use of technology in finance. Fintech is a word which is most commonly used in news these days. But what does it mean and how is it revolutionizing the financial service industry? Let’s see.
What is fintech?
Fintech is a combination of the words financial and technology. It refers to the use of innovative technology in the financial services industries. Today multiple Fintech companies have started using advanced software and digital platforms to offer a variety of financial services and products.
The main goal of fintech is to make financial transactions more efficient, accessible as well and user-friendly.
Fintech or financial technology has helped evolve the financial services industries in multiple ways. Some of them are-
- Payment processing- with the use of technology in the financial world, the way payments are received and made has become different. The use of digital wallets, peer-to-peer payment apps, mobile payment solutions, and online payment gateways are ways in which people have now started receiving money electronically. For example, UPI and Paytm are one of the most widely used payment processing networks in India today. Even a small panwari will have Paytm or an online wallet where you can transfer the money. People these days have almost stopped carrying cash because of this availability of technology for which all you need is a phone and you can transfer money with the click of a button.
- Online banking has also been made possible because of the use of technology. It allows customers to manage their accounts, transfer funds, pay bills and perform multiple tasks related to the bank without actually having to visit the bank.
- One of the other and most important uses of fintech has been that of lending and crowdfunding. Fintech firms have offered alternative lending platforms that use advanced algorithms to check if the borrower is worthy of taking the loan. They assess creditworthiness and provide loans to smaller and individual businesses after assessing them on multiple parameters.
- Fintech has also helped improve customer experiences, which has now become much more smooth and convenient for customers.
- The use of technology and faster technology today has allowed for funds to be transferred almost immediately. This helps increase operational efficiency, efficiency while reducing a lot of fixed costs or processing costs which earlier the banks had to bear.
- Greater financial inclusion has been one of the key drivers in the growth of fintech. As more and more people have access to the Internet or mobile smart mobile phones, technology and banking have made it possible for financial services to reach the unbanked and underbanked populations. Digital payments have also helped bridge the gap of this inequality and promote equal economic growth.
- Fintech is now also being used in investment and wealth management. Algorithm trading to using artificial intelligence to understand the markets or patterns in the market has been another way how fintech has helped transform financial services. You can also use advanced technology to manage your investment portfolios, making them more accessible to a broader range of people.
The use of fintech is still evolving and with the ability to use AI and ML, more possibilities are opening up. However, there are also multiple challenges regarding security, cyber threats and privacy when it comes to fintech. The biggest challenge is the lack of a regulatory framework for these and that is a key thing that needs to change when we consider the use of technology in the financial services industry.
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