Fintech is still a relatively new concept that most entrepreneurs don’t even know what it entails. The fintech industry has evolved steadily over the past few years as more entrepreneurs comprehend the value of financial service technology. A majority of other sectors, not just trading and banking are benefiting from fintech services. The modern day customer has come to rely on technology a great deal. That has made it necessary for companies to provide the latest systems when delivering services. But what is fintech?
Today’s consumer wants to pay for services on his/her mobile and trade stocks without depending on a brokerage firm. Fintech services have simplified financial transactions in various ways. However, taking advantage of fintech services is not easy when you barely grasp the basics. Asking the question; what is fintech is just the first step. Understanding how fintech affects your business and the most appropriate technologies to implement is the real task. Business owners have to be keen about the opportunities that fintech provides in order to capitalize on them for the betterment of their enterprises.
What Is Fintech?
Fintech refers to financial technology, which is the use of the latest inventions to provide financial services. Initially, when you did you ask yourself what is fintech? The answer now would consist of the back-end systems used by banks and trading companies to serve customer needs. However, financial technology has now expanded to cover aspects such as money transfer, lending, and fundraising. It is because of fintech that concepts like crowdfunding are popular when looking to raise money.
The business world is actively pursuing technologies that will improve financial services. Companies are investing more in fintech now because it offers a competitive advantage. A retailer that allows customers to pay using their smartphones offer more convenience than one that accepts credit cards only. The combination of financial talent and tech talent results in fewer complications not only when running a business. But this is valid for starting one as well.
Who Needs Fintech
Although the banking industry is the biggest beneficiary of fintech, startups and established corporations also have a use for it. Fintech applications are widespread across different industries. This means that all types of entrepreneurs can take advantage of the services. Some business owners integrate financial technologies into their existing brands. They can also invest in separate entities that are solely responsible for fintech services.
You may wonder; what is fintech and its role in my company and why should l set a budget for it? For one, fintech allows a larger access to financial services. The different technologies that businesses invest in make it easier for consumers that were traditionally cut off from financial services to get what they need. Entrepreneurs now don’t have to wait for venture capitalists or wealthy investors to put money on their ideas. This is because they can go online and start crowd-sourcing funds.
How Much Is Usually Spent on Fintech?
The question of what is fintech and its budgetary allocation for most companies is a tricky one. Being a young industry, many entities don’t spend as much on fintech as they do on other technologies. However, between 2008 and 2015, global fintech investment grew from $930 million to $12 billion with Europe seeing the largest growth rate. Since then the financial technologies sector has continued on an upward trend as enterprises allocate more funds to the services.
The agility of fintech services allows companies to save money, which is another incentive. Also, there is the lack of regulation that traditional banks have to deal with. Entrepreneurs realize the return on investment that fintech services bring if the implementation is right. It is why enterprises are concentrating more on the how of fintech rather than the how much. Mobile apps make up the largest investments in fintech for different industries. The increased use of smartphones means that a high percentage of consumers can easily make financial transactions using mobile platforms.
How You Can Reduce Fintech Spending: 5 Answers
1. Look at Costs
What is fintech’s budget allocation for your company and how can you minimize it? Take the time to define your current needs first. Just because a rival is investing in certain financial technologies does not mean your company has to as well.
Putting money in the wrong technology is one of the biggest causes of overspending on fintech. Analyze where your enterprise stands and which technologies would serve it best.
2. Also Look to the Future
Mapping out future goals is also necessary if you are to make the right fintech investment. Where is the organization heading? With proper management, an enterprise will evolve with time. So the objectives will shift with it. You may expect to have a given percentage increase in customers. Then your financial technologies should be capable of adapting to that change.
Planning five steps ahead when investing in fintech services will prevent you from spending money trying to scale your current system to cater to your new demands.
3. Organize Everything
Financial technologies emerge each day. That means companies sometimes have to upgrade to keep up. Even if it’s just a new interface for your mobile payment app, it will cost money.
Knowing how to time and implement fintech upgrades can minimize the amount you spend on the services.
4. Get the Right Employees
Untrained employees can cost your enterprise millions in fintech services. Ensure that your workers know more than just the basics of financial technology.
One aim of investing in fintech is to improve customer experience and consequently, revenues. If your employees don’t know how to apply different technologies correctly, then the company misses the mark on satisfying customers.
5. Always Research
Identifying fintech opportunities and capitalizing on the right ones is another way you can minimize your expenses. With all the fintech startups sprouting each day, the market is full of different tools. An entrepreneur should know how to look at these technologies and decide the most suitable one for his/her company.
Of course, the kind of business you run, the objectives, both current and future will determine which fintech services to invest in.
To the Business
The rise of fintech is not negligible. So companies have to dedicate enough resources to different technologies. Learning what is fintech and its impact on business gives entrepreneurs a reason to consider integrating financial technologies in their enterprises.
However, not every fintech investment will bring in good returns, so do your due diligence when setting the budget.
The images are from depositphotos.com.