Modern society has to get used to surprises. The progress of science and technology moves very quickly, sometimes changing the entire way of life even before the change of generations.

Financial technologies, or Fintech, is not a new term, but only in recent years has this activity begun to leave the world of banking and take on the features of a separate industry.

What is Fintech?

In general, fintech (financial technology) is technology applied in financial services or used to help companies manage the financial aspects of their business, including new applications and programs, processes, and business models.

Today, fintech has become the basis for all online transactions — money transfers, lending, utility payments, etc.

The Following Categories Of Fintech Companies Are Divided By Areas Of Activity

Loans and credits: Through the Internet, some companies offer financing services, such as crowdfunding and crowding. This list of services also includes providing loans online. The latter grants loans or not according to the decision of automatic algorithms.

Payments and transfers: You no longer need to contact a bank branch for such procedures. From your computer, you may transfer money and make payments. What’s more, you can even withdraw money from an ATM without a card. All it takes is the bank app on your phone.

Many fintech companies, competing with each other, can make cash payments faster and cheaper.

Investments: From new and improved trading platforms, through wealth management robots, to personalized financial advisors. Some services of this type attract significant capital, and traditional investment funds already see them as a threat to the sector.

Personal Finance: New services are offered through mobile apps that try to make personal finance smarter, more transparent, and easier. These types of services help users plan, control their spending, and save.

Currency: Especially when we travel to countries with different currencies, we need to change the payment currency. This process was traditionally carried out through banks.

Today, thanks to the development of technology, we can exchange currencies with other users over the Internet.

Blockchain: The technology behind Bitcoin could become the future of global financial transactions. Currently, a middleman is required to complete the transfer. For example, a bank. But what if intermediaries are not needed?

Blockchain technology creates a decentralized digital public registry. This record is secure, anonymous, and tamper-proof.

Advantages and Disadvantages of Fintech

The Potential Benefits Of Fintech Are Obvious

  • Speed and Convenience: Fintech services are generally delivered online and thus users can access them more easily and quickly.
  • Huge Choice: Products can be purchased remotely, regardless of your location.
  • Better Conditions for Services: Fintech companies usually do not need to invest in physical infrastructures, such as a branch network, so they can offer consumers more favorable terms for their services compared to traditional companies.
  • More Personalized Products: The technology allows fintech companies to collect and store more information about customers so they can offer consumers more personalized products or services.

However, Fintech has Certain Disadvantages

Unclear Regulation: Fintech companies are generally new to the financial industry and use business models that differ from traditional financial institutions. This can make it harder to figure out which ones are regulated and what your rights are if something goes wrong.

Spontaneous Decisions: Consumers of online services typically have limited time and information to make decisions, which often leads to rash actions.

Technological Risks: When you transact online, fintech companies get a lot of private information about you. As a result, your personal data may be misused or you may become a victim of cybercrime.

“Not for Everyone”

  • Although on the one hand access to fintech seems simple and clear, there are many categories of citizens who, for various reasons, cannot use gadgets or computers to carry out online transactions.
  • Сonclusion
  • Society is moving towards new horizons and exploring new ways of development.
  • In fact, the corporate world has historically tended to move in the direction of efficiency. That is, to achieve the same or better faster, cheaper, and more transparently. However, high prices for some financial services have led to the development of fintech.
  • At the same time, the development of fintech leads to a constant decrease in the costs of certain financial services. Improvements related to transparency, speed, and security.