An emerging era of Fintech

The pandemic of COVID-19 has added massive importance in Fintech. It has helped business owners and investors to access the financial data and basis of decision making in the most challenging time of the lockdown and closures. There has been significant development in this field, and modern products of Fintech are much advanced and designed to provide a technical basis for decision making.

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Fintech (financial technology) concept. Business person click on fintech text and financial icons.

Drivers of Fintech innovation

The world has observed instant development and innovation in finance by linking their operations with technology. Fintech affects the large banking sectors and also helps to increase the efficiency of small and medium businesses.

The higher expectation of the customers in terms of speed, cost, convince, and friendliness make it mandatory for the businesses to adopt and always look for the enhancement in their current businesses processes to improve their services. Further, evolving technology and changing financial regulations have massively added to the need to adopt enhanced technology related to finance. In addition to this, there are several aspects related to market structure that merit consideration of Fintech.

1-    Concentration

The adoption of Fintech allows non-traditional start-ups to compete with the existing players in the market. Hence, leading to distribution of the market share and relief in the competition for the market.

2-    Contestability

Traditional business start-ups require massive costs that favor barriers for entry and leading to oligopoly and monopolistic markets. However, technology has proved to significantly decrease the cost of entrance that encourages competition in the market.

3-    Enhanced potential for financial stability

Fintech has massive potential to add to the financial stability of the business. For instance, decentralization and diversification are supported by the implementation of technology that leads to enhanced efficiency, transparency, easy access to financial services, and excellent management of financial and operational risk.

Fintech and business processes

Fintech is about integrating the different processes that lead to enhanced efficiency and the cut in the cost as there is more speed, greater flexibility, and less time consumption. Massive impacts of Fintech have been observed on all aspects of the business processes. Further, the more obvious impact of Fintech can be observed in the following business areas.

  • Robo advisor/algorithm-based decision-making tool can be used to automate different processes, including investments that lead to a decrease in the cost of operations and enhanced accessibility.
  • Data storage and cyber security – the business data can be stored on-site and off-site with greater security and frequent backups. It helps in not only efficient data storage but an efficient tracking.
  • A connected network of financial institutions leading to better services.
  • Distributed Ledger Technology – Helps the business to maintain a record of the computers on the network, which is considered one of the main aspects of the security of the data stored in servers.
  • Business banking- technology has added in significant ease for financing and cash management, leading to enhanced accuracy in budgeting, forecasting, cash management, and added intelligence in the investment modules of the business.

 

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