How FinTech is influencing the finance industry
If you are unfamiliar with the term ‘FinTech’, then this stands for “financial technology”. According to Wikipedia, it is a line of business based on using software to provide financial services. It is already turning the personal finance industry on its head, enabling Joe Public easier access to products and services, typically quicker – as well as cheaper – than getting the same product or service in the traditional way.
It’s FinTech and we don’t even know it
While FinTech has been a buzzword for the last year or so, there are many services already up and running giving consumers the benefit of secure, convenient financial technology.
Contactless transactions are one example of FinTech. Paying for goods this way is already commonplace for most of us, yet the premise was only introduced in to the UK in 2008.
If you own an Apple Watch, then you can (soon) use Apple Pay to pay for goods and services, without even needing to find your wallet or purse. You simply add your chosen debit or credit card details to a Passbook within one of your Apple devices, and then can make payments from a simple click on your iPad or smart watch.
But it isn’t just banking systems that are being overhauled by FinTech – individual businesses and start-ups are using FinTech to improve on existing products and services to offer convenient solutions for their clients and potential clients – typically at a lower cost.
One such example of a company that saw the benefit of financial technology as far back as 2011 is Nutmeg, the UK’s first online discretionary investment management company.
Using FinTech enabled them to remove the aspects that made the wealth management industry unpopular among workers of average income (such as high fees, lack of transparency and unattainable minimum investment amounts) to create an easy, online wealth management tool allowing the creation of a portfolio within just ten minutes. This is backed by expert professionals management and, typically, lower fees.
They are one of a number of forward thinking companies to offer customers an easier way to manage their finances.
And this is just the tip of the iceberg, with more and more companies looking at how they can make the most of the technological innovations available in order to keep ahead of their competitors.
What are the benefits of FinTech to the consumer?
To an individual consumer, FinTech typically provides:
● Easier access to financial products and services wherever and whenever they want (all they need is internet access)
● Easier ways to carry out transactions
● Lower costs.
Looking at the bigger picture, a recent infographic* suggested that FinTech could reach 2.5billion unbanked people around the globe – giving people the ability to make financial transactions without even having a bank account.
FinTech is here to say
A recent article in the Guardian newspaper estimated that within the next decade, the banking industry will become almost unrecognisable due to new FinTech products.
This can only be good news for the individual, as it will allow for easier, more transparent processes as well as more control of their finances at a lower cost.