You don’t know how valuable what you have is until it is missing. But it is also true that you dont know what you’ve been missing until it arrives. This is the case of some fintech companies that are helping many solve financial problems they didn’t even know existed.
Before now, the financial industry was dominated by established banks, insurance companies, and private equity companies. Because of that, customers didn’t have many options. That means they had to endure the exorbitant bank fees, deal with slow transfers, and talk about the inconvenience of using traditional banks.
However, with the rapid growth of technology, FinTech companies are now coming up with new opportunities to solve long-standing challenges such as payment processing, inclusion, security, and convenience.
In this article, I will talk about how FinTech companies are disrupting established financial companies and how they are helping us solve problems we didn’t know we had.
What problems are FinTech companies solving?
Partnering with banks
The banking industry is a multi-trillion dollar industry. What this means is that we’re probably not going to see the local banks replaced by FinTech companies any time soon. However, FinTech companies are now partnering with banks to solve some of the problems that customers have.
In a survey by CNBN, only 23 percent of consumers say their banks are meeting their expectations. Sadly, the banks remain the only option without FinTech companies.
FinTech companies are now acting as a non-bank alternative for financial services thereby solving the issues of transparency with pricing and fees.
Both banks and Fintech companies are mutually benefiting from one another. Banks provide bank recognition, years of experience, and a customer base. While FinTech companies use advanced technology to provide financial solutions that customers can benefit from. An example of this is the Bank of America and Zelle partnering to make payment easy via mobile.
More convenient payment options
Another problem that FinTech companies are solving is making payments more convenient. In the traditional banking sector, payments might have to go through a series of processes. This takes time and the processes involved even make it more expensive.
Although most banks now have online payment methods either through their website or mobile apps, this is still not the most efficient method. But FinTech companies are making this process simpler and faster.
For example, companies like PayKey are making banking services instantly available in daily transactions across mobile apps. Users can send money instantly to their friends through Facebook Messenger, Twitter, and other apps.
Payment Processing and security
The next problem that FInTech companies are solving is payment processing and security.
There is a long-standing problem with traditional payment methods and the security of customers’ info. For example, 271,823 cases of credit card fraud were reported in 2019.
Mobile payment solutions from FinTech companies can help solve these issues since they are encrypted. Customers can now shop for their favorite items online from the comfort of their homes without worrying whether their data would be compromised. This additional security is also one of the reasons why some FinTech companies are now considering blockchain technology which is the next point.
Blockchain technology is the same technology the Bitcoin and other cryptocurrencies are built upon.
This is a form of digital ledger distributed among many computer networks to increase transparency and security. Every transaction that takes place on the blockchain is encrypted and recorded. No individual or group of people can alter this information. No wonder big companies including banks are exploring blockchain technology.
If you have been following the news recently, you might have heard of DeFi which is short for Decentralized Finance. This is an emerging financial technology that uses the blockchain to facilitate financial transactions between individuals without the need for a central body like the traditional banks.
Although blockchain technology is still frowned upon by many, its benefits are enormous. First, transactions on the blockchain are secured and transparent. In addition, blockchain technology will allow more people to have access to financial services, which I will cover in the next point.
Last but not least is that FinTech companies are making financial services available to people with limited access to financing.
If you’re under 30, you might be 1 out of 3 adults that still have student loan debt to pay. You’re just starting life and you don’t have a credit history to help you obtain further loans to finance your dreams.
However, FinTech companies are removing these limitations by providing peer-to-peer lending services. Again, this is one of the solutions that DeFi platforms seek to provide.
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