Financial technology, also known as Fintech, is an industry that uses technology to deliver financial services. Unlike traditional methods of delivering financial services, with Fintech, computer programs/applications and other technology are used to support and even automate banking and financial services.
The use of smartphones for mobile banking and cryptocurrency are examples of using technology to deliver financial services.
How Fintech works
When the term ‘Fintech’ first surfaced, it referred to the back-end technology systems of financial institutions like banks, including activities such as international money transfers and depositing cheques using smartphones. With time, the scope of the term broadened to include sectors like financial education, retail banking, fundraising and non-profit, and investment management.
Fintech platforms enable run-of-the-mill tasks like depositing checks, moving money among accounts, paying bills or applying for financial aid. They also encompass technically intricate concepts like peer-to-peer lending or crypto exchanges.
Businesses rely upon Fintech for payments processing, e-commerce transactions, and accounting. In the wake of the COVID-19 pandemic, more and more businesses are turning to Fintech to enable features like contactless payments or other tech-fueled transactions.
Typical Fintech Users
Fintech is used by businesses to obtain loans, financing and other financial services through smartphones. Other cloud-based platforms and customer relationship management services provide enterprise-oriented services that allow companies to access and manage financial data, with B2B-focused cross-border payments that cater to businesses’ international transfer needs.
Fintech is used in several B2C applications like PayPal, Venmo, and Apple Pay, which allow users to transfer money through the Internet.
Nigeria’s Interswitch, a leading technology-driven digital payments company, is helping to shape the payments ecosystem across the growing e-commerce sector in Africa. Interswitch offers the largest system integration in e-payment services in Nigeria, with a broader presence across Uganda, Gambia and Kenya. The platform is scalable across multiple channels (ATMs, POS and e-Commerce) as well as card types (Debit, Credit and Prepaid).
Benefits and beneficiaries
Applications of Fintech
As seen in companies like Kickstarter, Fintech allows Internet and app users to send or receive money from others on the platform. It also allows specific individuals or businesses to pool funds from a variety of sources on a single platform.
Crypto exchanges like Coin base match buyers with sellers of Bitcoin and Altcoins. Block chain and cryptocurrencies are some examples of Fintech outside traditional banking.
In the last few years, use of mobile payment apps like Apple Pay, Alipay, and Paytm has increased exponentially. All these apps use sophisticated financial technology.
Insurtech includes everything from car insurance, to home insurance, to data protection. With Fintech, insurance services can be accessed via the internet.
Robo-Advising and Stock-Trading Apps:
Robo-advising provides algorithm-based asset management recommendations and portfolio management at a lower cost than an individual would face as compared to working with a traditional wealth manager. While some investors may still prefer the face-to-face experience when it comes to managing their wealth, many people–particularly younger people investing smaller amounts–are willing to experiment with robo-advisory.
Quick money transfers:
Fintech helps expedite processes that once took days, weeks or even months, like requesting a credit score report or sending an international money transfer. Platforms like Upstart and TransferWise accomplish these tasks in a fraction of the time.
I3C offers a full complement of information technology products and services inclusive of Fintech Solutions which we have successfully implemented for government agencies, corporate clients and private sector players in Uganda and the wider East Africa sub-region and beyond.