Fintech

In Depth Analysis of Financial Technology Institutions

Financial technology at its core is used to help other companies, consumers and other businesses in managing their businesses by providing them with specialized software and algorithms. The greatest advantages of this software are that they can run on computers and smartphones.

What is Financial Technology?

A technology involved in providing financial services or help companies in managing affairs/issues related to finance by using various software, applications, and even business models. Common examples include the use of smartphones for mobile banking, cryptocurrency and investing services.

The innovative forces that increased the demand for Financial Technology are as follows;

• Increase in the demand for online shopping has led to the development of more cashless solutions for transactions
• Nowadays banks are also adapting Financial Technology as a solution to engage more customers
• New trading platforms are looking for ways to collect data to manage and follow current market trends
• With the help of Financial Technology companies now are able to provide customized insurance products. Also, it is enabling insurers to analyze data about their clients
• These companies also make use of Artificial Intelligence to give financial services

What do Financial Technology Companies do?

A fintech or financial technology company is a company that provides financial services to other companies on digital platforms. They develop various technologies and use various tools to provide these services.

Common Tools used by Financial Technology Companies

The below mentioned are a few of the tools these institutions use to give financial services to companies;

Lending Softwares

One of the key focus areas of Fintech software development is Digital lending. It is transforming the traditional ways of applying to banks or other credit unions to get loans. The use of these lending platforms allows financial companies to issue a credit by using technology to automate and accelerate the process. Also, it reduces other costs and provides user-friendly solutions

Some of the software that fintech companies can develop for the lending category are;

• Loan Origination Software: These platforms enable financial entities to provide faster loans to consumers through various channels. In other words, this software is a platform to centrally manage and automate various stages of the loan giving process, e.g. Loan application, document verification, etc.

It is Improving customer experience, helps to automate business processes, improves the efficiency of the operation, detects frauds and provides faster loans than traditional banks.

• Commercial loan Software: is used for evaluating borrowers, decision making support and to automate the online lending process. This platform covers all lending lifecycle i.e. origination, underwriting, collateral, servicing, collection, and reporting

It eliminates repetitive data entry and decrease errors, it makes transactions faster by optimizing approval cycles and also improves cross-selling opportunities

Banking software

Nowadays banks are using digital methods to provide their services. They use secure techniques and install cutting edge technologies like face/voice biometrics, AI, etc. to improve security and ultimately customer experience.

Below mentioned are some of the banking software you can consider developing in your business;

• Online Banking Software: As the name suggests this is software that provides customers with a platform, online to avail of financial services from banks. The major advantages of this software are that it works 24/7, satisfies customers more as it is online and ultimately provides faster solutions, more customers can reach it because of its availability online, it can be accessed through any digital platform, etc.
• Mobile Banking Software: It is the same as Online Banking Software the only difference is that it is specially built for the smartphone platform. It enables the user to easily access important financial information and banking capabilities. It allows the user to make real-time payments, transfer money between accounts, pay bills, and to locate ATMs on their mobile phones.

Insurance software

Insurance software is used by modern insurance companies. These companies use specialized apps to reach new customers online. Also, they are more flexible than traditional insurers. Modern insurers use technologies like IoT, mobile software, data science and other digital solutions to provide easy access to insurance to customers.

Below mentioned are some of the insurance software you can consider developing for your business;

• Insurance CRM software: It is a software used by the insurance agent that shows the customer information and allows him to assign tasks, generate documents and track progress. A few examples of this software is its low cost and it is efficient, also, it is automated so there is no need to feed data manually, it also saves time and increases the agent’s efficiency.
• Insurance agency software: It is a software used by the insurance agency to organize their workflow. It assists the business to administer policies, billings, claims, and other services provided by the agency. Advantages of this software include; it provides a single platform to manage customers, improves customer retention, sends timely notice to the customer for late payment and renewals, organizes the company’s workflow, saves extra costs, etc.

Payment processing software

Payment processing software provides users with a platform to make transactions and creates a smooth experience for the company and for the customers. It is a software that enables companies and individuals to receive and send money automatically. A few advantages of this software include; it increases efficiency as it automates the processes, decreases the demand for the physical presence of an employee, etc.

These are just some of the tools used by fintech companies. These companies use numerous other tools to generate/provide new services.

What is there for Consumers from Fintech Companies?

• You get more options to choose from to manage your money: Fintech companies can provide customized services as they have greater access to consumers’ needs and a range of other information about them.
• Now remittance transferring is faster and cheaper: Earlier it was very expensive to send money to individuals residing in other companies. But now by using fintech services like blockchain infrastructure, it has become very easier, faster and cheaper.
• It is easier to open a bank account: Now it is easier to open a bank account without going to a bank. Statistics say that between 2011 and 2014, 700 million people have become a bank account holder. And the percentage rose from 24% in 2011 to 34% in 2014.
• You have your financial advisor in your pocket: Finance management apps help consumers by providing easy access to almost every financial service through your smartphones. These apps use transactional data and behavioral information and provide insights, plans and prompt to help a user manage their money. It also ensures that bills are paid on time.
• Now you don’t have to worry about losing your wallet anymore: fintech services have transformed the means of transacting. Now the cashless mode of payment is being adopted by consumers. According to surveys, the total value of cashless transactions worldwide increased by almost half from the year 2009 to 2014.
• The risk associated with it is privacy: As these platforms use your personal data to assess your profile and determine your credit score this is considered as a breach of privacy by some users.
• Use of AI really eases the process: Fintech platforms also make use of Artificial Intelligence to learn new processes and provide the user with automatically generated analysis. The consumer makes decisions based on that analysis and decides plans to invest in. The users of Robo-advisers have doubled between 2016 and 2017.

A Brief History of Fintech in India

Fintech or financial technology is relatively a new industry in India. It is an industry that comprises companies who use technology to provide financial services to other companies. They operate in the Insurance, asset management, payment, and various other industries.

Reports by NASSCOM-KPMG estimates the total budget of fintech services and software was $ 8billion in 2016 and it likely can grow up to 1.7 times by 2020.

Also, it states that the transaction value can grow up to $73 billion in 2020 which was approximately $33 billion in 2016. It is growing at a five year {CAGR} Compound Annual Growth Rate of 22%.

The segments of the Indian fintech industry are as follows;

• 34% in payment processing
• 12% in trading in the public and private markets

Common Challenges Faced by Financial Technology Companies

The following are some of the challenges faced by the Financial Technology companies;

• They are often doubted/less trusted by financial regulators like the issuing banks or the federal government
• Data security is a major concern of the clients because of the threat of hacking
• Any data breach can lead to a bad reputation of the fintech company

What Kind of Job Opportunities Fintech Sector Provide?

Fintech sector provides numerous kind of job opportunities for the youth population in India. The number of employed population leads to more growth in the economy of that country. And thus, it can help grow the economy of our country. Also, it increases the chances of foreign investors being interested in the Indian market/services. Some of the jobs you can get in a fintech company these days are as follows;

• App/site developer: With the increase in the demand for fintech services the demand for developers to develop services in these companies are also increasing. As fintech platforms mainly work on the iOS, Android, SRE and full-stack, etc. this leads to more job opportunities for developers having related knowledge.
• Customer support: Providing fintech services also means maintaining and retaining customers by helping them with any query and giving other support. Customer support in fintech is generally using automated techniques like chatbots to assist their customers. A human employee creates and maintains these chatbots.
• Product Manager: The role of a product manager is to understand the customer very well and then provide them with a related, out-of-the-box solution.

Also, Read: What is Digitalisation of Business

Fintech sector provides various job opportunities and above mentioned are just a glimpse of them.

Risks Associated with Fintech Companies

Although fintech companies have benefits of their own they also have certain risks associated with them. We are going to look at the risks that can occur in services related to fintech.

• Privacy: Companies operating in the fintech sector uses consumers’ personal data like social media profile to evaluate their credit score. Sometimes these are sensitive data and needs extra protection. Moreover, if the company fails to protect this information are liable for legal action against them by the government.
• Regulations: Because fintech industry deals with a high amount of other people’s money they are highly regulated. They should comply with all the regulations imposed on them by the regulatory bodies.
• Speed: The major advantage of using fintech services is speed. The services provided by fintech services are very fast. But it requires them to adopt measures and be quick in solving problems related to frauds. But some of the fintech companies fail to keep up with the latest technologies and processors and this could lead to hacking and other frauds.
• Digital lending: Although, lending from digital platforms is monitored properly there can be chances of losing money in case of breach of security.
• Higher chances of misconduct: The growth in fintech platforms provides alternative solutions to traditional methods of dealing with finances; the ways to commit a crime on digital platforms also have increased.

To Conclude

Financial technology companies are companies that use technology to provide financial services. They use various cutting edge tools to develop these services. Also, they like every other industry include some risks in their functioning and the services they offer. But still, this can shape the future of how we use to transact today.