With the digitization of almost all the sectors in our life, the way we see and use money has also changed drastically. People today are comfortable with carrying out online money transactions, making online purchases and payments, sending money across virtual platforms and also lending, borrowing and investing online. Online banking has become popular among many and transactions that are based on API have become a new way to handle money.
1. A major Shift in Financial Services
With the introduction of FinTech companies that provide virtual financial service, the manner in which people utilized and handled money has undergone drastic changes in the past two decades. Developed and technologically advanced systems of software and hardware have allowed FinTech companies to provide much more user-friendly and secured financial transactions.
To offer such lucid and flexible platforms for quick and secure financial transactions, internal infrastructure has to be overwhelmingly complex. To make this process simple for common-man, digital currencies and cryptocurrencies were introduced while the regulatory framework had to be more rigid and sophisticated. No wonder modern fintech companies have to upgrade and develop technologies in order to be able to produce extremely complex yet easy to use, safe and highly secured financial services so as to exist, thrive and function in today’s immensely volatile environment.
2. Reasons for the Growth of the FinTech Sector
Utilization of fintech tools and services can be attributed to many aspects. It promotes cashless transactions, ensures quick and safer money transactions, lets you connect with banks and other platforms seamlessly with a mere hand-held device, facilitates online shopping along with easy processing of loans and payments. The emergence of e-commerce is another factor that has brought about immense advancement in financial technology. Apart from this boom in the use of digital currencies that have grabbed the attention of investors is another significant reason for the ultimate sophistication of fintech industry.
3. Investment in Cryptocurrencies
Investors are always watching out for investment options that are safe and provide lucrative returns in a short time. Gone are the days when equity, property or forex was considered as some of the best investment options. It’s time and age of cryptocurrencies that have immense potential to multiply money in a short time frame than any other cash investment can ever do. Cryptocurrencies like Ethereum and Bitcoin are limited in nature and therefore have a tremendous value attached to them and can be traded for large amounts of local currency. Hence it becomes necessary to minimize the dangers of prying programs and internet connections that can launder your money and hack your personal accounts. This arises the need for secured technology which can be achieved by immense development in the field of safety and security in current Fintech.
4. Better Exchange Rates
Previously individuals and small businesses had to accept undesirable exchange rates and only banks and large organizations had access to near-market exchange rates. But today, many FinTech companies provide competitive near-market exchange rates.
5. Little to Zero Transfer Fee
Just like exchange rates, transfer fees adversely affected the cost-effectiveness of the transactions. Banks collect high transfer fees while FinTech companies charge little to no transfer fees. For instance, FinTech organizations such as OFX and Currencies Direct offer fee-free transfers to almost all the countries.
6. Multiple Payment Options
Most of the FinTech that facilitate overseas money transfers provide their clients with multiple payment methods to choose from. Bank account transfers are the most secure and cost-effective in nature. All FinTech companies don’t accept payments through credit and debit cards and organization that allow card payments tend to charge extra fees for the same. Other methods that you can opt for payments are SOFORT, POLi, iDeal, Google Pay, Apple Pay, ACH, etc.
Introduction of Fintech has revolutionized the way in which financial transactions were carried out. Today transactions have become easier with user-friendly software, faster with improved connectivity, cost-effective with reduced transfer fees and exchange rates, safe and secure with decentralized technologies like blockchain and flexible due to availability of various modes of payment. These are major shifts that are sure to disrupt traditional banking and financial institutions in coming days.