How is FinTech Changing the Financial Services Industry?
Since the 1950s, developments in the financial services industry have created a financial technology infrastructure which most people never think about, but use almost every day. Commonly known as FinTech, it refers to any technology that automates and facilitates access to financial services.
At its core, FinTech has enabled financial services to be offered entirely online and often within minutes. Here are some sectors of the financial services industry that have been revolutionized by FinTech:
Following banking trends and the needs of its customers, banks have been constantly expanding their range of service offerings while innovating ways to provide a more customer-centric experience. By developing their own websites and mobile applications, banks can not only advertise their services online, but also enable customers to easily access and use these services on their own devices. A common feature seen in digital banking platforms is the chatbot, which is a virtual assistant that typically answers simple queries in a short amount of time and automates data collection.
2. Foreign Exchange
Not to be confused with the forex marketplace, foreign exchange simply means the conversion of one currency to another for a purchase or sale. Foreign exchange services used to be only available over-the-counter but with recent technological innovations, they are now also available online. Peer-to-peer foreign exchange services such as Transferwise have enabled the conversion and transfer processes to be automated, cutting out the middlemen and therefore reducing costs for consumers. Online currency conversion platforms such as Berry FX show both the mid-market price and the customer price when a quote is requested so clients get true pricing transparency.
Traditionally, making investments in the financial markets meant that one is wealthy. However, that is no longer necessarily the case anymore. With the development of mobile investment applications like SoFi Active Invest, anyone can purchase stocks from as low as a dollar and trade them directly from one’s smartphone with no commission fees included. However, if clients are unable to pick stocks on their own, then consider smart money management applications like Betterment. Depending on what the client is investing for and when it is needed, the robo-advisor will recommend a portfolio specific to the client. Clients can begin with as much money invested as they want and the application does the rest of the work for them.
Similar to how banks have built a digital presence to serve its customers better, insurance companies are following suit as well. Clients no longer need to sit down with insurance agents to discuss policies, get a quote or even file a claim. Instead, all of these can be easily done so using the mobile applications developed by insurance companies. Clients are also able access and use the other services available in the applications. When shopping for coverage, one can consider using insurance comparison websites such as Policygenius that helps to compare several different types of insurance types at once online.
5. Tax and Accounting
By tapping on emerging technologies such as artificial intelligence, machines are able to perform most of the responsibilities of accountants more efficiently. Processes such as invoice management, credit control, cash flow forecasting, and reconciliations can be easily automated. The availability of real-time financial information and reporting enable businesses to choose between taking a calculated or spontaneous step when reacting to situations. For better insight and decisions around budgeting, forecasting, analysis and resource management, businesses can consider using applications such as Fluidly that offer credit flow and automated cash flow forecasts powered by artificial intelligence. The prospect of having real-time and regular reports without the cost of employing accountants is very attractive, especially for small businesses that usually have limited monetary resources to work with.
Just like any other technological advancement, FinTech is slowly revolutionizing how the financial services industry operates in this digital era. In the coming years, FinTech is surely set to expand with many other digitized financial services under its wings. Only time will tell how big of an impact FinTech will have on the world.