FinTech seeks to simplify transactions, making them more accessible. It is the software, mobile applications and, in general, all the technology that automates financial services.
Currently, we hear about different terms that we often do not know and can confuse us. One of them is FinTech; a term that is actually not as difficult to understand as it seems, so today, we want you to know what FinTech is and how it works.
As its name indicates (Fin-Tech = finance / technology), is the combination of the financial world and the technological world, making the latter increasingly agile and simple. At its core, FinTech is about using technology to improve traditional forms of financial transactions for both businesses and consumers. It ranges from payment method applications such as PayPal or CashApp that we use on a daily basis to blockchain networks, commercial platforms and the development of cryptocurrencies.
Now, there are many companies specialized solely and exclusively in the development of financial technology solutions, to give you an idea in Brazil there are 498 companies dedicated to this; in Mexico about 249, Colombia 128 and so on. However, the participation of FinTech is not limited to the financial industry per se, but also focuses on improving and offering new opportunities in the way that small, medium and large companies from different industries manage their own finances.
Use of FinTech
Among the main purposes of financial technologies we can find adding value to current financial services, as well as generating practical solutions through technological innovation to administrative, accounting and economic activities, thus revolutionizing traditional processes.
Taking into account that FinTech solutions can arise according to the needs of the market, we can say that FinTech serves to:
- Streamline payment, transaction and online banking processes.
- Development of infrastructure for financial services through data science, big data, business intelligence, blockchain, among others.
- Develop systems for database security.
- Manage digital assets, cryptocurrencies and improve alternative monetary policy.
- Automated management of online financial processes.
- Carry out crowdfunding activities (collective financing).
How does FinTech work?
To understand how it works, we must see it as a customer-focused digital methodology. Therefore, digital financial services and products are characterized by their simplicity, innovation and strategic added value to satisfy the final user, democratizing access to these services for all types of users (consumers, businessmen, investors, administrators, lawyers, etc.), since it improves the conditions in which financial products are used or offered.
Therefore, in terms of the operation of FinTech, it is based on bringing all those banking, administration, accounting and economic processes to people in a more friendly and practical way, with the help of accessible digital tools such as mobile apps, platforms websites, specialized software, among other resources. In this way, companies manage to meet their needs in terms of financial management and transaction, while satisfying consumer demands in terms of agility and transparency.
In a world where financial processes are becoming increasingly digital and innovation is more advantageous, adopting means and resources that facilitate both the business and the customer experience in terms of banking and administration represents a beneficial investment for companies that aspire to remain ahead of market demands. After reading this article, we hope that the term FinTech will no longer be part of those that are new and unknown to you.
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