Fintech is an essential tool for expanding financial services and products into new areas and among different demographics.
Notably, the industry players create user-centric, innovative solutions for the modern financial services market. It includes corporate banking, insurance, brokerage, etc.
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| What Are the Main Operations of Modern Fintech Companies?: eAskme |
FinTech projects integrate innovations more efficiently than classical financial organizations, add new products and services faster, change business models, and provide services in almost all markets.
At the same time, the key participants are mainly fintech companies and non-traditional players in the financial sector.
Traditional participants are forced to adapt to new realities and modify their products or develop new ones.
Thanks to digital financial technologies, customers can access financial services anytime and anywhere. Online services can meet your needs by providing maximum convenience.
Lending platforms can get you from $100 to $5,000 by having you fill out a simple online loan application.
Completely secure, the online loan application is then used to match you with a vetted lender.
While your credit history will be examined, most lenders will be willing to give you a loan regardless.
Main Directions in Which Financial Companies Operate:
The companies in the fintech industry can be divided into two groups: startups that provide technical solutions for existing financial firms and startups that work directly with consumers of financial services.
In general, there are several areas in which modern FinTech companies operate.
Personal Finance Management:
First comes personal finance management, i.e., the application of mobile and desktop programs that allow you to control the movement of private funds and receive detailed reports and assumptions about future costs based on predictive analysis.
Payments:
Fintech couldn't be streamlined without payments. It is a branch of financial technology which offers significantly more progressive approaches to financial transactions.
P2P Lending:
Next, let's talk about P2P (peer-to-peer) lending. P2P lending involves obtaining/providing loans from person to person.
Startups in the lending field do not require the participation of a banking institution based on distributed technologies.
Security:
Security is yet another crucial element.
It involves services for banking institutions featuring simplification and automation of customer authentication and the development of measures to combat fraud.
Investment Platforms:
Investment platforms offer automation of investment using predictive analysis based on Big Data.
Innovations in this area allow for automating decision-making.
These include robotic advisors based on information processing under a particular algorithm that automatically generates investment decisions online.
A robot consultant evaluates information about a potential investor to determine the objectives of the investment and its propensity to risks.
After processing client data and information from the stock market, the robot consultant offers ways to form an optimal investment portfolio.
Big Data Analysis:
Big Data Analysis, i.e., sets of information so extensive that traditional methods and approaches (primarily based on business intelligence solutions) cannot be applied.
Thanks to Big Data, fintech specialists analyze borrowers' creditworthiness while reducing the time for processing loan applications.
In addition, it is possible to examine each customer's operations and provide them with convenient banking services.
RegTech:
RegTech is a unique direction of innovation that allows you to quickly and automatically adapt your business to changes in legislation and market conditions.
Crowdfunding:
Crowdfunding is funding through fundraising for any project via the Internet.
The market is open to new ideas. Many companies offer solutions that allow investors and startups to find each other.
B2B Fintech:
B2B fintech is a separate well-known fintech branch that solves the issues of calculations and data exchange in business.
The latest promising trend is the development of smart contracts based on blockchain.
InsureTech:
InsureTech is a startup in insurance technologies that offer the market fully automated insurance products, including mobile applications, interaction at the level of the Internet of Things, P2P insurance, and automation of recourse payments.
Modern users are already offered a service for remote contracting through the insurance company's website and new types of insurance and various additional features, such as short-term insurance via mobile devices and online access to databases to store info about the insured property.
Neo-Banks:
Neo-banks (challenger banks) are completely online banks (without a branch network) built from scratch on new technology resources, in contrast to the out-of-date infrastructure of traditional banks.
As a rule, non-banks offer higher interest rates, lower commissions (or no commissions at all), and a higher class of service and support.
Cryptocurrency:
Cryptocurrency is a special kind of digital money based on distributed networks and public transaction logs.
In combination with the monetary system, valuable cryptography ideas allow the creation of anonymous, highly secure, and sustainable virtual assets, mining companies, investments, and ICO sites.
Money Transfers:
Money transfers. Unlike startups in the field of payments, companies in this area are working on innovations that allow transferring money without the involvement of banking institutions.
As a rule, the technology provides a simple mobile platform and supports alternative approaches to customer authentication (for example, through social networks).
Artificial Intelligence:
Artificial intelligence backs up the implementation of solutions that decrease the highest costs of financial companies, i.e., staff costs.
Blockchain:
A blockchain is a distributed database that saves information about each transaction made within the system.
Blockchain solutions are applicable in any field, including financial technology.
One of the most well-known solutions in banking transactions is the Ripple platform.
Note that the above classification is conditional, as innovative approaches are constantly changing and fintech areas are expanding continuously.
Key Benefits of Fintech:
The apparent advantages of fintech are the following:
- Fintech services are usually provided on the Internet, and thus users get direct and fast access without intermediaries.
- Consumers can benefit from the diversification and selection of products/services made possible by remote access.
- Fintech companies usually do not need to invest significant resources in physical infrastructure to provide consumers with more favorable conditions than traditional companies.
- The latest technologies and artificial intelligence allow fintech firms to gather, store, and process more information about customers. That enables them to offer consumers more personalized products/services.
Therefore, fintech opens up great opportunities for all financial actors.
It provides customers with reduced costs, real-time payments, a wider choice of services, and greater convenience.
In addition, fintech can help increase access to finance for individuals and small- and medium-sized businesses insufficiently covered by financial services.
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