The innovation in the financial services industry opened new channels for businesses to manage the payment landscape. Established banks leveraged technology for the backend systems initially. Fast forward to this date, Machine Learning, data analytics, and blockchain technology are taking it one step ahead.
Moreover, Fintech or financial technology isn’t just improving their business models but also reducing associated risks. Lack of proximity, price transparency, and flexibility make traditional banking institutions unfit for businesses. Thus, Fintech is the ultimate solution to address those challenges.
How Fintech is Redefining Financial Services?
Fintech helps e-businesses thrive in an increasingly competitive market in several ways, including wealth management, payment, and lending processes. Let’s check out current trends and industries impacted by Fintech services.
Improved Transparency and Visibility
Financial institutions now provide improved sender and beneficiary experience using cutting-edge technologies like API integration, virtual account management, and SWIFT GPI.
API is a plug-and-play solution that easily integrates into existing treasury interfaces and infrastructure. It offers beneficiaries greater transparency and visibility about the payment status. They can get real-time updates about the payment process. Besides, senders can check FX rates upfront to mitigate risk across their global accounts before initiating a payment.
Instant Credit Decisioning
The Buy Now, Pay Later (BNPL) payment model has been a game-changer for instant credit decisions. The installments at the point-of-sale approach help merchants drive sales and reduce cart abandonment. Consumers also consider BNPL a convenient, low-cost credit option to make a purchase. As per a study, the number of BNPL credits in the U.S. grew from 16.8 million to 180 million between 2019 and 2021.
Hence, this short-term financing system transformed the online shopping experience for retailers and consumers.
From corporate to non-discretionary purchases, the BNPL payment method is available in various business sectors. Established banks can also explore new opportunities by collaborating with PayTech partners to increase lending growth and collaborate in the future.
Small businesses can get easy access to previously unavailable funding solutions. As the industry evolved, raising fund effortlessly is no more a challenge for startups and small-scale businesses. Today, leading financial institutions use online fundraising platforms to provide alternative investment services to prospects.
Fintech apps streamlined the crowdfunding process by providing P2P (Peer to Peer) payment solutions. Further, the technology quickened the fundraising cycle by simplifying the follow-up process with the investors.
Thus, technology is helping early-stage and seed A businesses to expand their reach by raising funds more efficiently and smoothly.
Impact of Fintech Services on Different Industries
Several digital-first mindset industries are now investing in tech-friendly financial products and services. Here’re the real-time use cases of Fintech in some sectors.
Travel & Hospitality
The tech-friendly customers look for one-tap payment solutions when booking flights, hotels, and cabs. To cater to those needs, the travel industry is embracing Fintech solutions like conversational commerce.
It allows businesses to connect instantly with their customers via messaging apps like Whatsapp and Facebook Messenger. Customers can seamlessly book hotels or flights using a payment link sent to their chatbots. Besides, travel service providers can improve customer satisfaction by providing direct support regarding payment queries directly through these apps.
Technology enables healthcare service providers to offer superior experiences to patients. That said, Fintech companies introduced improved digital service models to eliminate gaps in the healthcare system.
Usually, the health coverage payment process is expensive, stressful, and complicated. Fintech can address challenges people face due to inadequate access to high-quality healthcare. Today, the differently abled can easily access health payment schemes with assistive technology. Data-powered fintech solutions simplify the entire process for these users. Further, low to moderate-income populations can access affordable care solutions through mobile-based health savings accounts.
However, the use of technology in this industry is more than payments, medical insurance, and data flow. Fintech is also helping people curb the rising chronic diseases and recurring costs through gamification. These digitally-advanced healthcare platforms incentivize patients to build healthy lifestyle habits.
For example, US-based organizations like Betterfly and Paceline merge fitness and financial rewards to encourage people to work towards their well-being.
iGaming is one of the first industries to embrace the latest innovations, including Fintech. Online gambling platforms provide a seamless transaction process for players. Hence, they accept payments via advanced banking methods, like e-wallets and digital currencies. These apps also charge minimum to no deposit and withdrawal processing fees. For instance, many players are now switching to a no deposit instant withdrawal cash app casino.
Further, blockchain technology adds an extra layer of security for online gamblers. The anonymous and decentralized ledger system protects players’ valuable data from the claws of bad actors.
Thus, leveraging digital payment systems enables iGaming companies can entice more gamblers looking for quick, reasonable payment solutions.
Cloud-based financial management systems that manage customer transactions can also yield valuable insights. As the fintech world moves towards real-time insights, data-driven marketing strategies will help e-businesses to boost their sales. Businesses can use the large dataset to identify the most selling products or services.
Further, they can track a customer’s buying patterns and habits to offer personalized suggestions. For instance, an online shopping site can offer exclusive discounts on users’ favorite makeup brands based on their purchase history.
- What are the 3 pillars of fintech innovation?
The three crucial pillars of Fintech are capital formation, credit & risk solutions, and data analytics.
- What is the role of Fintechs in payments?
Fintech payment solutions ensure affordable, faster, and secure transaction processes. Thus, it fills gaps in the standard banking system.
- How is Fintech changing business?
With Fintech solutions, businesses can drive sales by providing seamless payment systems to consumers and exploring new opportunities. Besides, it fastens the funding process for startups by decreasing the paperwork.
Undoubtedly, Fintech plays a critical role in various industries. With Artificial Intelligence, blockchain, and Machine Learning technologies, Fintechs remove the inefficiencies in financial services. Thus, a shift from traditional to digital payment systems will add higher value to the customer experience for enterprises.
From payment processes and credit options to improved financial services, digital transformation has been a disruptive solution for every e-business. They act as a bridge between conventional and digital financial services to fill the existing gaps.