Financial institutions are tasked with keeping businesses of all sizes financially sound while also providing everyday people with accessible banking options. Fintech, or financial technology, is a new disruptive technology in financial transactions that will change banking behaviour for stakeholders and allow for better fund traceability against specific assets. This article discusses FinTech as a Disruptive Technology for Financial Institutions, with an essential reference source that discusses FinTech applications in small, medium, and large businesses, as well as through social and religious filters.
What is Fintech?
The word financial technology (Fintech) refers to a new kind of technology that aims to improve and automate the delivery and use of financial services. Fintech is used to assist companies, business owners, and consumers to be able to better manage their financial operations, processes, and lives through the use of specialized software and algorithms that are utilized on computers and, increasingly, on smartphones too.
What are digital disruptions?
Digital disruption is an effect caused by or expressed through digital capabilities, channels, or assets that alters fundamental expectations and behaviours in a culture, market, industry, or process.
What is the difference between digital finance and fintech?
Fintech, or financial technology, has transformed financial services by introducing new technologies, products, and business models. Fintech competes with old traditional financial banking methods and long-standing institutions by offering new technology-forward products and services.
Digital finance, on the other hand, refers to traditional banking services, activities, or products that have been digitized and are now available through online channels, applications, and mobile platforms.
Fintech startups are digital natives that have disrupted legacy banking through digital functionalities, simplicity, big data, accessibility, agility, cloud computing, contextuality, personalization, and convenience. Fintech is changing not only the way people pay, move funds, give, borrow, and invest, but also how they pay, transfer money, lend, borrow, and invest. Traditional banking wrapped in a digital wrapper is what digital banking is.
They are not the same thing.
But let's be clear: digital banking isn't all bad. It's great! Most people never need to go to a physical local bank again to deposit a check, transfer funds, or even open an account. However, digital banking should not be confused with fintech. The industry-shaking, forget-about-banks fintech is driving billions of dollars in investment, leaving existing firms with only two options: join or be left behind.
What are the 4 categories of fintech?
Fintech users fall into four broad categories:
1) B2B for banks
2) Their corporate clients
3) B2C for small businesses
Trends toward mobile banking, better knowledge, data, more precise analytics, and decentralization of accessibility will allow all four groups to connect in previously unimaginable ways.
In terms of consumers, as with most advanced technologies, the younger you are, the more likely you are to be aware of, and accurately describe fintech. Given the massive size and increasing earning (and ownership) potential of that much-discussed segment, consumer-oriented fintech is primarily aimed at millennials.
Before the invention and widespread adoption of fintech, a company owner or startup would already have gone to a bank to secure financing or startup capital. If they wanted to accept credit card payments, they would need to establish a partnership with a creditor and even install technology, such as a phone line card reader.
With digital technology, those barriers are no longer an issue. Some fintech observers believe that the focus on millennials is due to the size of that market rather than the ability and desire to engage Gen Xers and Baby Boomers in using fintech. Fintech, on the other hand, tends to offer almost nothing to customers since it fails to meet their demands.
Jan 30, 2022