FinTech was on the up in 2021. The number of people who used technology to manage their finances last year has risen to 88% from 2020’s 58%. While people can easily attribute this to the rise in remote transactions due to the pandemic, this is hardly a fad.
FinTech, short for “financial technology”, automates financial processes to compete with existing traditional financial systems. FinTech is a broad term and may cover all sorts of applications involved in finance, including bookkeeping applications, cryptocurrency, online banking systems and investment software.
FinTech is not going away any time soon. A growing number of individuals and organisations are adopting innovations in finance, as can be seen in these statistics:
- FinTech offers a viable alternative to traditional financial systems. According to a Plaid survey, 69% of respondents profess that finance technology has essentially become their lifeline amid the pandemic.
- A growing number of sectors are adopting FinTech. The aforementioned Plaid survey showed us that 79% of the baby boomer segment respondents have already adopted FinTech solutions. There is also notable growth in the Hispanic American sector, whose usage rose from 62% in 2020 to 96% in 2021.
- More people depend on FinTech. The survey also notes that 58% of respondents can’t thrive without any sort of technology to manage their finances. Indeed, between 80% to 90% of consumers are planning to keep using the technology for the coming years.
Why take advantage of FinTech?
With so many things going on in the FinTech world, it is high time that start-ups take advantage of technological innovations in finance. Below are a few major reasons why:
- FinTech makes finance more efficient. Any technological innovation in finance is set to make transactions less wasteful in time and other resources. Automation on various aspects of finance and electronic transactions simply save users time and effort, making FinTech very appealing in the fast-paced information era.
- FinTech makes new business opportunities available. Innovation in finance opens new markets as new demands specific to businesses must be met. Furthermore, it provides banks additional opportunities to innovate without making large, risky investments.
- Technology enhances financial security. Protecting consumers against fraud is important in highly competitive markets like FinTech. Weak security can lead to incidents that can hurt customers and erode trust. It also helps that technologies specifically created to combat fraud and protect financial businesses from cyber attacks exist in this sector.
- With FinTech, financial information is available in real-time. Improvement in analytics and machine learning algorithms make it easier for finance businesses to understand their clients. In-depth insights, in turn, are key to better customer experience, higher client retention, and more informed business decisions in general.