Svetlana ShevchukFinancial services companies will be familiar with the challenges of working with large-scale businesses. Balancing paperwork and other manual tasks is part and parcel of the job. But if you’re not careful, you can end up buried under a sea of paperwork. This is time-consuming, causes undue stress for your teams, and increases the chances of errors occurring.
Many financial sector companies are keen to find a solution to these problems. Enter FinTech, an innovation that is revolutionizing financial management. Keep reading to learn more.
Table of Contents
Evolution of FinTech
The term FinTech is a portmanteau of the words “financial” and “technology” that refers to technological developments in the financial sector. Broadly, they help to assist with financial tasks. Modern FinTech apps allow users to get quick access to company financial information. They can perform transactions, manage accounts, and easily spot any risks. Businesses that provide these solutions are referred to as FinTech companies.
The technology isn’t anything new, although it has come on leaps and bounds in recent years. An early example of a FinTech product is the credit card, invented in 1946. No longer needing to carry cash, people could make cashless transactions. This is a strong example of how transformational innovations in FinTech can be.
The earliest FinTech developments focused on back-end improvements for banks. Financial processes became automated so that money could be transferred more easily. Transactional reports and summaries could be generated quickly, improving timeliness and ease of access.
Since these humble beginnings, FinTech has gone from strength to strength. Financial services such as PayPal began to emerge, providing online-only access to finances. The rise of smartphones helped these innovations to develop further. Users could now manage their finances straight from their pockets.
A more recent innovation is cryptocurrency, which is another FinTech development that is having significant impact.
Today, FinTech embraces artificial intelligence, providing smarter financial insights, greater encryption, and a host of other benefits. It’s now forecasted that there are 3.5 billion FinTech users worldwide.
Core areas of FinTech impact
Let’s explore some of the areas where FinTech has had a major impact.
Payments and transactions
All modern banks now offer applications to allow customers to manage their money. A user can log in and gain instant access to their finances. From their phone, they can instantly send funds to other accounts and create new payees. They can view a list of recent transactions, and make sure their finances are in order.
Applications such as PayPal and Venmo also enable users and businesses to transfer money easily. A user can simply enter a recipient’s email address, and send money instantly. These applications also enable users to send to users in other countries using different currencies.
Another innovation is billing software which enables businesses to automate invoice requests. Instead of filing each invoice manually, a user can program invoices to be sent automatically. This makes sure that documents are always sent on time, and never overlooked.
Lending and credit
It’s now easier than ever for a person to apply for a loan. They can simply go online, fill out the necessary forms, and file their application. This can easily be reviewed, and users can receive a swift response. Customers can now also use comparison sites to compare the loan offerings from different companies.
Users can now also easily carry out credit checks online using most banking apps. Previously a user would require lengthy checks involving lots of paperwork. Today, they can gain access to their score from the press of a button.
Investment and wealth management
Investors can now monitor investments from stock trading applications. From there, they can track the latest market trends, and even make new investments. From an investment platform, users can also sell shares and view their trading history.
Wealth management apps can also bring a range of benefits. A user can gain insights into their income and expenditure. They can also link with all of your bank accounts to provide comprehensive information relating to transactions, and spending habits. A user can also set financial goals to help improve cash flow.
Benefits of FinTech to the financial sector
It’s clear FinTech has made major impacts, but how is it assisting the financial sector? Let’s explore some of the biggest benefits.
Increased efficiency
Consider how a financial services company would have operated before FinTech developments. Without basic banking apps, for instance, it would take clients much longer to gain access to even basic transactional information. A client might need this information urgently.
There would be a delay before they can make financial decisions, make purchases, or begin a project. Payments would also take longer to arrive. Business would be dependent on a client filing and posting a cheque.
These innovations improve the customer experience but also automate financial services. This increases efficiency and allows financial services to focus on value-added activity.
Another example is the financial analysis software you use in your day-to-day work. Without these tools, your employees would be sifting through piles of paperwork. Not only would this be a slow process, but also potentially quite dull and prone to errors.
FinTech tools help to streamline procedures. Jobs are completed more quickly, and services companies can easily work with more clients.
Cost reduction
FinTech tools help to reduce costs in several ways. These include:
- Automating processes – Automation software can automate manual processes, such as filing invoices, accounting, and other key areas. This enables service companies to operate with a smaller workforce.
- Cost of services – By reducing costs in other areas, services companies can offer more cost-effective payment plans. This can help to pull in more customers.
- Paper reduction – Without FinTech software, you’d have to commit all financial documents to paper. For some clients, this can be a huge volume of reports, statements, and other documents.
Improved customer experience
As we’ve explored, FinTech means financial services companies can complete tasks more quickly and efficiently. This means that customers don’t have to wait as long to see results. A speedy service keeps customers happy and makes them more likely to use your services in the future.
FinTech also makes it easier to convey insights to your customers. Previously, you might have handed customers a blizzard of reports and other documents. But thanks to highly intuitive accounting software for Mac, PC and a range of smart devices, you can easily present insights from a variety of user-friendly interfaces these days.
FinTech tools increasingly allow us to convey data more easily by creating visualizations. These help to make information more digestible for clients.
Improved risk management
Manually handling tasks increases the chance of errors. As we’ve established, manual tasks can also be highly dull. When employees’ minds start to wander, there’s a risk they’ll make a mistake.
These errors can be very costly and damage customer confidence. Automated financial tools never tire or lose interest. They’ll complete their tasks exactly as they have been programmed to. This significantly reduces the chance of errors occurring.
Some FinTech tools also enable users to spot risks before they become too problematic. Risk management tools can alert users to any potential issues that may have been overlooked. They can also post compliance issues and make sure companies stay in line with legislation.
Innovative technologies in FinTech
As we’ve explored, FinTech has transformed the industry, especially in recent years. This innovation has continued. Let’s now turn to some of the latest FinTech trends.
Big data analytics
Modern businesses collect huge amounts of data. This has enabled FinTech products to make use of big data. This consists of large and extremely detailed datasets. Broadly, big data can help make smarter, more informed decisions.
In terms of FinTech, big data analytics can be used to analyze customer financial behavior. This can enable financial services companies to create more relevant strategies to assist clients. This boosts customer relationships and helps to increase the chance of a positive outcome.
Artificial intelligence and machine learning
Machine learning technologies enable artificial intelligence tools to make decisions without human input. To work effectively, this requires a steady stream of high-quality data.
Many FinTech products now utilize machine learning for predictive purposes. AI can analyze historical financial data and use other factors, such as market trends, to predict future patterns. Services companies can use this information to provide more in-depth insights for clients.
Regulatory technology (RegTech)
Financial compliance is essential for all businesses. But with increasing volumes of complex legislation, this task is becoming more difficult. This is why many businesses are now looking to financial compliance companies for support.
Regulatory technology (RegTech) is a solution that many companies are using to make this task easier. The term encompasses various forms of technology, each designed to help with different aspects of compliance. RegTech tools can:
- Create a more streamlined compliance process by removing gaps and silos.
- Help analyze legal text and keep businesses up-to-date with changes in legislation.
- Connect employees across organizations to raise awareness of potential compliance issues.
Final thoughts
Time and time again, FinTech has proven to be a revolutionary technology. It’s clear that without development in financial technology, businesses across the board would suffer. FinTech cuts out sluggish processes, boosts efficiency, and provides deeper insights.
For financial services companies, FinTech provides a chance to offer better services to clients. It can also significantly cut costs, reducing paper usage and cutting out manual processes. Perhaps most significantly, FinTech provides easy access and greater accuracy. There’s less risk of disappointing clients as a result of costly errors.
With the future of FinTech set to be even more transformational, now is the time to get on board. So, why not see what FinTech innovations can do for your financial services company?
