You might have heard of the term ‘Fintech’ a lot over the last few months, especially in the media and tech world.
After landing at $19 billion in total in 2015, global Fintech funding had already reached $15 billion by mid-August 2016, the industry is continuing to grow at a rapid pace throughout 2017.
So, What Is Fintech?
Simply put, the term ‘Fintech’ is an acronym for ‘financial technology’ and is simply becoming a huge disrupter in the startup scene.
Fintech sectors can be considered as mobile payments, banking, money transfers, loan, fundraising, asset management – almost any form of technology that is finance/money.
The impact of Fintech is now so popular that it has affected the way the financial industry operates. More and more financially focused cities such as London are constantly trying to adapt their products and services to new technology in order to compete with competitors.
40% of the London workforce is made up of financial and technology services and the UK financial sector has been the main reason for the country’s recovery after the global financial crisis.
With the industry proving to be an important contributor of the economy, the government is encouraging growth in the tech sector in order for it to sit along side the financial sector.
Why Is Fintech Important For Small Businesses?
With the rise of the Fintech industry growing at a rapid pace, it’s important for businesses to pay attention to it and not get left behind. The traditional business methods of going to a local bank and seeking out a conventional investor is no longer the only way to do things.
Businesses will benefit from adapting to the industry changes to prevent them from losing touch with modern trends and losing businesses to competitors.
Here’s 3 ways Fintech can be used to benefit a business owner or entrepreneur:
Crowdsourcing allows people to gain funding from investors (or anyone who likes the business idea) from all over the world. Crowdsourcing platforms have replaced a large chunk of the investing industry as they don’t require the long-winded paperwork and meetings that a traditional investor would. Crowdsourcing platforms are a great way for entrepreneurs to get funding for their business as well as gaining feedback and advice on new products and services.
- Transferring and Receiving money
With many businesses operating online, transferring payments across seas and managing global transactions in different currencies can come at a cost. With Fintech platforms such as Transferwise and blockchain technology, business owners can reach a wider audience whilst reducing or even eliminating the costs associated with abroad payments – without the high fees that usually come with traditional high street banks.
- Alternative lending
Fintech lending services provide new methods of personal and business loans, providing more people with lending options at a much faster rate. With most lending services offering an easier application experience compared to that of traditional financial institutions, Fintech for lending could be a great way to get funds to grow your business, quickly.
With the industry growing year on year, the Fintech world is only just beginning and predicted to be here for a long time. Therefore, it’s crucial that entrepreneurs stay up do date with trends in the financial technology world so that their businesses can adapt and grow accordingly.
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