Hailed as a game changer, FinTech (otherwise known as “financial technology”) is seen to transform financial services in infinite possibilities. It has been many decades ago since there has been a real shake-up in the realm of the financial world. New and young players alike will experience its sweeping changes on how we manage finance and run businesses professionally.
What is FinTech and Why It Matters to You
FinTech can be best defined as technology that imparts disruptive elements (in a good way) to areas such as money transfers, mobile payments, fundraising, loans, asset management and even investment. In layman’s term, it is the thing that enables you to have access to various financial services from your own smartphone, tablet, laptop and other electronic devices.
Furthermore, FinTech is one of the hottest areas that receive massive investment from around the world. This accelerates its exponential growth. Whether you like it or not, FinTech is about to drop a bomb on everyone. It’s very important to know how it can change money practices that we think we already know.
FinTech: Threat or Opportunity for Business Owners?
While one may argue that FinTech is just a change of paces and phases, the truth is that it will not be that beneficial if one chooses to tackle it halfheartedly. From simple business owners to big corporations, all of them will be wondering what FinTech means for their businesses.
In the past, anyone would tell you to look for a bank or an investor in order to get the funding to establish your business and company. The emergence of FinTech simply means that you will be able to get your funding beyond your own town or country. The power of crowdfunding is self-evident when people with big, bright and bold ideas are able to acquire much-needed funding quickly and easily from the people they have never met.
In terms of speed, one does not spend months of negotiating and talking with the investors when it is possible to secure the funding in a matter of weeks. This can be achieved with greater efficiency while eliminating the annoying or time-consuming bureaucratic red tapes that are just unfavorable in a rapid-growth market.
The major challenge of FinTech to all business owners is more on its uncertain risks. Since FinTech has been expanding rapidly, there will be a problem of regulation in matching with its pace. In other words, it emerges as the potential “Wild West” that attracts criminal activities as well as malpractices. As history has shown, regulation tends to be one step behind the march of innovation. Caution should also be taken on legal loopholes that current regulations and traditional protocols are yet to detect.
If you embrace the change just for the sake of changing without a clear strategy and backup plan, chances are that you will not be able to reap much benefits from FinTech. Your business will be suffering from the usual problems of poor adaptation to all-new digital environment. Not just that, you are burdening your business with unnecessary technical complications.
What About the Consumers?
Despite its so-called disruptive effect, FinTech spells good news to consumers. With the rise of mobile and on-demand economy, the readiness of people to get engaged in managing money and business online is also a positive factor that encourages the growth of this sector. Our long-standing frustration with old-fashioned banking practices has been the festering wound that causes us to lose faith and trust in these monolithic financial institutions. The arrival of FinTech has made various financial services and tools to be seamless, efficient and personalized.
The high rate of mobile penetration and the growing numbers of smartphone users also mean that FinTech will be getting a huge opportunity to further revolutionize the financial ecosystem. FinTech also simplifies transferring money across the borders. Traditionally, transferring money from one country to another can be very expensive and slow. Peer-to-peer money transfer changes this, with money crossing different borders with minimal cost and even with an automated investment service advisor.
Being More Informed is Your Own Protection
FinTech presents the same problem in terms of cyber security and regulation. It will take some amount of time before the law can catch up with FinTech and criminalize wrongdoing. It also opens potentially new problems in tracking and tracing money trails. Moreover, it also makes issues such as identity thefts and stolen credit card details to be more dangerous than ever before.
The rather untapped potential of FinTech encourages non-financial players from tech backgrounds such as Facebook, Google and Apple to make further inroads in it. Therefore, FinTech will be presenting a brighter future for everyone who chooses to embrace it.
This post was written by Aaron Tam from iPrice Group.