Sagara Technology – Fintech is the innovation that seems to break down the barrier of the future in the finance field. Fintech’s rise to power forced traditional systems to adapt and offer new solutions to customers and businesses. These solutions are meant to streamline their work and facilitate interaction between those who activate in the finance field.
In general, banks and the finance field as a whole have been relatively quick to adopt new technologies and upgrade the services they provided to their clients. There are several factors that drive the rise of fintech, such as:
- Technology development, technology nowadays is changing super fast and we are very closet to it in our day-to-day lives. Technologies such as IoT, AI, blockchain and cloud computing are the major drivers of FinTech companies.
- Consumer behaviour, it has shifted and the previously existing financial systems in some markets are simply not keeping pace with societal changes, allowing technology enabled players to enter the market.
- Lowwered entry barrier as technology has evolve , forcing financial institutions to change or be left behind.
- Greater access to information through analytics, artificial intelligence, and cloud computing allow companies to be more adaptable to see trends – and adjust to them – more quickly.
Why fintech is the future?
1. Blockchain improvement
Blockchain can improve the speed of transactions, Payment usually goes through many steps to authenticate and authorize the person who is allowed the transfer of the transaction details, and the actual settlement. Settlements often take two days or more. However, blockchain reduces the steps into one step that can be done within a few seconds or minutes.
2. FinTech Can Solve the Credibility Issues
Peer-to-peer lending is a form of direct lending of money to individuals or businesses without an official financial institution participating as an intermediary in the deal. Nevertheless, peer-to-peer lending comes with a few disadvantages like credit risk, no insurance/government protection, and legislation. FinTech can solve the credibility problem, and greatly reduce transaction costs and risks.
3. Reach Underbanked
Due to cost constraints, the bank’s regulations are unable to reach people in some areas. FinTech could help banks in providing financial services to people who lack access at lower costs by maximizing economies of scale. FinTech is increasing the speed, security, and transparency of transactions and allowing for the development of sustainable financial products tailored to the needs of people with low incomes.