You have probably heard the word fintech. But what does it mean? In recent years, the relationship between technology and finance has changed and evolved towards aspects that we could not have imagined years ago. Fintech is a term that is on many people’s lips, regardless of the sector or professional industry to which they belong.
In this article, we will try to clarify with a brief introduction about the new term that is revolutionising the global economy.
What is fintech?
The term fintech comes from the union of two concepts: finance and technology, referring to all activities that involve the use of innovation and technological developments for the design, supply and provision of financial products and services. Fintech are all those digital companies that use technology to improve and automate financial services and processes, revolutionising the way we manage money and changing the way we understand finance.
At the same time, as financial technology has changed, so have concerns about its security. Technology has always been a part of the financial world, but in recent years it has grown and transformed as it has sought to improve and offer new opportunities for managing one’s finances.
Objectives of fintech companies
Today, the banking industry is facing an inevitable transformation driven by the changing habits of society. The emergence of fintech companies confronts the more traditional companies with new challenges and obstacles to avoid disappearing.
These are some of the objectives of fintech companies:
- Improve the positioning of innovative financial services.
- Increase the value of services.
- Simplify financial processes.
- Achieve greater cost efficiency.
- Transform products and make them more accessible.
- Offer better solutions through technology.
- Improve transparency.
The financial industry is changing, it is accelerating the digital transformation of its sector to face new challenges, challenges and changes such as regulation or transparency of fintech. This new sector offers the opportunity to perform a multitude of operations and to see the real-time performance of money. Fintechs are here to stay, already representing almost 5% of the banking business thanks to their rapid growth.
These are the sectors where fintechs stand out:
- Digital banks
- Payments and transfers
- Cryptocurrencies and Blockchain
- Investment and savings
It should not be forgotten that fintech activity is not risk-free, as not all fintech companies provide the same services or operate in the same markets. Some of the fintech risks to be taken into account are risks arising from liability for their professional financial services, external cyber risks and risks arising from the protection of the decision-makers’ own personal assets.
In short, traditional firms in the financial sector need to change with the opportunities offered by technology to stay in the market. Thanks to technology, fintech facilitates the relationship between institutions and their customers. The entry of technology into the financial sector brings improvements and innovations that give rise to new services, so it is important to inform yourself in detail about the advantages and risks associated with it.
Check out our latest article! In which we talked in detail about how to carry out the digital transformation in 2023, since as we have also seen in this post, technology and innovation is changing the way companies relate to their customers, suppliers and their own workers.