What are Fintech Companies?
Fintech (financial technology) – technologies that help financial services and companies manage the financial aspects of a business. These include software, applications, processes and business models. Fintech also refers to an industry where companies use new financial technologies and solutions to compete with traditional financial institutions for the hearts and funds of customers. Most often these are tech startups and companies that use fintech tools to improve their services. For example, Chinese WeChat is a set of applications from the Tencent holding. This platform contains the “WeChat Payments” option, to which every 5th user (889 million people use the application every month) has linked his bank card and has access to the “Wallet”, to all commercial functions and trading accounts. They help pay for many offline and online goods and services with their smartphone.
Do you know the transformative potential of Fintech companies to innovate and impact the lives of users? According to the latest survey by the IDB and Finnovista in 2018, more than 1,100 companies in the sector were identified in Latin America, many of them in advanced stages of development and operating beyond their borders. Discover the state of the industry in the region and participate in our new Fintech 2020 study.
In the middle of the last global financial crisis in 2009, Paul Volcker, who headed the US Federal Reserve from 1979 to 1987, said that “the only useful thing that banks have invented in the last twenty years is the ATM.” . For Volker, such a statement was because the ATM did represent an innovation that directly benefited people, helped them save time, provided them with greater value and convenience. And is that, although innovation in financial services is not new, few innovations had represented a transformation with a direct impact on the lives of users of financial services.
This nexus between financial innovation and its direct impact on people is precisely one of the keys to understanding why in recent years there has been so much talk about the transformative and disruptive potential of the Fintech sector, despite the fact that innovation in financial services does not it is new per se.
Why are Fintech Companies Needed?
There are over 700 startups in the US financial sector today and the number continues to grow. Such rapid growth is explained by a qualitative change in the attitude towards the fintech sector on the part of investors and a noticeable interest from potential users who want to access financial services simply, quickly, from anywhere and not pay large commissions for it. In the Russian market, we observe similar trends: among clients who want to improve the quality of services they receive, less often go to bank branches, investors, most often among banks seeking to lead the fintech sector by financing or acquiring the most promising companies. More and more customers are choosing Internet banking or applications on their smartphones to manage their personal finances and will prefer the service, which either does not require direct contact with the bank at all, or will provide an opportunity to solve the arising problems in a chat with a bank representative. Thus, the customer focus of a service or service, along with access to investments and advertising, can be called one of the most important factors in the success of any startup. Moreover, how technology can help a client largely determines its prospects. It is the lack of clarity at the moment of the significance of the blockchain technology for the end-user in many ways that has generated many questions and skeptical sentiments in relation to this technology, with the unconditional recognition of the revolutionary nature of this direction. The customer focus of a service or service, along with access to investment and advertising, can be called one of the most important factors in the success of any startup. Moreover, how technology can help a client largely determines its prospects.