Fintech? You might have heard this word a lot of times? With technology advancing each day, no sector including financial services has been left intact.
Fintech in its longer interpretation stands for financial technology. The phrase in layman’s terms means technology that improves, promotes and provides financial services.
Oxford defines fintech as “Computer programs and other technology used to support or enable banking and financial services”. And for Wikipedia fintech infers to “Financial technology, also known as FinTech, is a line of business based on using software to provide financial services.
Financial technology companies are generally startups founded with the purpose of disrupting incumbent financial systems and corporations that rely less on software”.
While there is no one set definition for the term fintech, broadly It is all about leveraging technology to make financial services more efficient and accessible. This intervention of technology in financial services leads to innovations that make it easier for both operating financial processes and providing financial services.
Conventionally, fintech was considered to be the back-end technology used by financial institutions like banks but now it’s more about “technology for finance”, no matter if it is commercial or personal finance.
I think you do have a better idea of fintech now. Paying to stores online, checking your bank balance online, trading online, investing online, analyzing market trends using special software like Python, etc, all these are just some examples of Financial technologies we have today that make our life easier.
All the financial activities you do that use technology comes under the grand scheme of fintech. Fintech has become a necessary part of our life today. Companies that provide you such services such as a company that provides you a platform for investing online can be called a fintech company.
The growing number of fintech companies is a clear indication of many scopes in the fintech realm. Many Fintech startups have received billions of dollars as funding.
P2P lending platforms are getting more and more popular and companies that sell shares online are equally famous. You all know how insanely bitcoins became popular in the past years. Blockchain is another example of fintech. These companies, in a nutshell, are companies that supersede traditional ways of carrying out finance activities with more lenient ways using technology.
Fintech has also made investing easier and accessible to all. Today, anyone can start investing their money with just a click, thanks to financial technologies that evolved over the years and startups that harnessed the technology.
Here is how can you leverage this fintech and invest your money.
P2P lending companies provide a platform to connect lenders and borrowers. Taking a loan has become easier with peer to peer lending startups. You can also invest your money with P2P technology. Lending your money in a P2P platform will give you higher returns as lenders can get a higher interest rate on these platforms.
The peer to peer lending platforms can charge you an amount but that would be nominal and worth it.
RBI has categorized all peer to peer lending platforms as non-banking financial companies so have no worries about the legality of these P2P platforms. By 2050, the global P2P market would be worth nearly $1 trillion. The amount is huge and gives you an idea that the industry is going upsurge in the future.
You can get started with P2P lending within minutes, all you need is to find the right platforms. Most companies provide you an option to invest as much money as you want. You can lend your money to different individuals on the platform and earn decent interests and this will also diversify your portfolio. Today there are a variety of financial technologies you can further use to asses credit risk and other data before investing.
Yet another investment scheme where people invest their money on an unlisted company in its early stage. People invest their money in such companies in exchange for shares in that particular company. Early-stage unlisted companies are not listed in the stock market.
When you buy a share of any company, you become a sharer of the profit the company yields in the future that is you become a partial owner of the company.
crowd investing platforms even allow common people who are not very wealthy to invest in startups. Earlier only wealthy people used to put their money in companies for a share in the company, but fintech has allowed even the common people or the crowd to invest their money in companies for share, this is what crowdfunding is all about.
You can also start investing money in the equity crowdfunding platforms. There are a number of such platforms present online that lets you invest your money for shares in different companies.
Crowdfunding lets startups owners raise capital for their ambitions from a large pool of people instead of getting funded by only a single person or organization.
Although, these startups might go in lose and so your money but still investing in startups can be a very high reward investment if you can choose the right horse to risk on.
Fintech has yielded another attractive investing scheme called proptech. Proptech is often called real estate technology. Proptech is all about integrating information technology and platform economics with real estate investments.
You can invest your money in real estate by leveraging technologies to asses economics, returns, and other factors.