Fintech includes the use of digital technology for financial services. Even though the fintech industry has been evolving for quite some time, it became dynamic during the Covid pandemic. The adoption of fintech has resulted in efficient and inclusive financial services. Startups across the globe are entering this niche, and consequently, fintech is rapidly transforming the landscape of financial services.
The Driving Factors Of Fintech
The popularity of digital technologies has drastically reduced the entry barrier for startups and small businesses. It has created new opportunities for fintech firms to disrupt the financial ecosystem for good. Another driving factor is consumer behavior which is rapidly adopting digital experience. For instance, it is now common for consumers to transfer money to buy tickets for Lottery Sambad with just a few taps on the smartphone. With the changing customer behavior, businesses are moving towards customer-centricity and helping to fulfill the customers’ demands. Other contributing factors of the fintech boom include improved internet penetration, low prices of smartphones and considerable investments in this sector. Here is how fintech is changing the face of the financial industry.
Smart Chip Technology
This technology is popularly used in ATM cards to minimize financial loss in case of a mishap. Smart Chip Technology comes with EMV technology which is embedded in the chip. In addition, the technology utilizes a one-time password for each transaction that users make and, thus, increases security. For example, if someone is withdrawing the money won in Bodoland Lottery, they must first enter the one-time password and the PIN code to withdraw the money successfully. In short, smart chip technology provides additional security to ATM card transactions.
Increased Speed and Efficiency
One of the most significant advantages of fintech is that it has dramatically increased the speed of financial transactions, making it more efficient. Nowadays, it is possible to make mobile payments in a fraction of a second with the help of fintech.
Restructuring Of Financial Service Operations
It is common for fintech firms to use artificial intelligence to improve financial operations, which comes with the added benefit of reduced cost. The combination of artificial intelligence and machine learning is restructuring financial services and making them more customer-centric. In addition, it is also tightening cybersecurity. For example, it is now common for banks to use the technologies that fintech provides to analyze creditworthiness automatically by incorporating predictive analytics.
Fintech allows banks to serve customers using a branchless format. In branchless form, the banks use virtual assistants to answer customer queries. Also, the banks offer this service through omni channel platforms over text, social media and email.
Biometric sensors are another advancement for ATMs. Even though it is still in the pioneer stage, it is expected to become popular in the upcoming years. With biometric sensors in ATMs, consumers will no longer have to carry plastic cards or remember any identification number. Instead, biometric sensors will allow the users to withdraw money by recognizing fingerprints, eyes and palms to identify the owner’s account. With the mass introduction of biometric sensors in ATMs, consumers will no longer worry about losing their ATM cards.
Another significant benefit of fintech is that it has made financial services accessible to a vast segment of the population, including the rural population. Subsequently, fintech enables inclusivity in the financial sector, which is a must for the development of the economy of a country.
In the last few years, electronic wallets or e-wallets have become prominent, with many major players entering this sector. E-wallets make it possible to make various payments while providing users with reward points and cash banks.
The Impact Of Fintech On The Economy
Fintech serves a country’s digital economy. Studies show that fintech stimulates the digital economy development of a country in two ways. Firstly, it promotes technological innovation in the financial sector. Second, it weakens the economic decentralization of local government and thus opens the door for new financial players.
Also, fintech eliminates the bank’s role as a middleman and allows enterprises to receive loans at a reasonable rent. Subsequently, it further boosts the economy of a country. However, it is important to have friendly policies in the country to ensure the maximum benefit of fintech. Many countries are realizing the numerous benefits of fintech and are drafting policies to encourage it.