The financial sector is at the crossroads of resuming the necessary digital transformation and continuing to offer the best services to its customers. We’ll tell you all about it!
The financial sector is an engine of our economy, crucial to underpin the recovery we are starting to build. It is also vital in terms of employment, having signed 6,459 contracts last April. But the sector’s main challenge is the pending digital transformation that will revolutionize the business as we know it.
A revolution in response to changes in consumer consumption trends. The pandemic has driven new habits that younger consumers were already putting into practice. They are more demanding, more informed customers who are opting for a different way of communicating with companies. This digital and multichannel way is far from the traditional uses of banking.
The main protagonist of this evolution is fintech, whose financial and stock market activity is carried out through the use of new technologies.
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What is a Fintech?
In general terms, a Fintech is a company that incorporates technology into its financial processes and services in order to automate or improve them and reduce costs. Therefore, a company is considered a Fintech when it uses technology to provide financial services. The company does not necessarily have to carry out the activity of transferring money digitally. Still, it can, for example, be in charge of digitizing the contracts that banks generate on paper.
It is interesting to know the origin of the term fintech, which comes from the union of two English terms, “Finance” and “Technology,” which together give rise to what we know as financial technology.
It is important to bear in mind that FinTech’s does bring with them advantages but also involve risks in some aspects, such as cybersecurity or the lack of clear regulation.
How does a Fintech work?
FinTech’s make use of blockchain technology that allows them to collect all transactions made between consumers in blocks of information in a decentralized manner. Blockchain is so popular that soon even services like https://essayswriter.org/ will use it and be considered an ed-tech company rather than an ordinary online service.
They generally do not have branches or physical points of sale and have automated most of their internal processes, allowing them to be more competitive compared to traditional business models.
FinTech’s offer financial products that are fully online and available at any time and from any smart device, thanks to the use of disruptive technologies, flexible structures, and agile methodologies.
The exponential growth of the Fintech sector has not only revolutionized the banking sector but has also created job opportunities as more and more professionals specializing in the field are required.
What services do FinTech’s offer?
FinTech’s offer different services with a common purpose: they seek to facilitate access to financial services by applying new technologies. In other words, FinTech’s provide financial services in a faster and more accessible way with lower commissions than traditional financial institutions.
Therefore, FinTech’s not only offer financial services such as access to payment methods, digital wallets, or lending platforms but also facilitate access to these services to the entire population due to their online nature. In addition, these companies usually apply a customer-centric approach in their models, which allows, if the situation requires it, to offer ad hoc services in an immediate and personalized way.
How do FinTech’s make money?
Most FinTech’s earn profits through assets such as subscriptions, third-party financial services (mortgages, loans, credits…), and advertising.
Fintech examples
The specialized digital media Financer.com has published a list of the best American Fintech of 2022 that we can take as examples of Fintech companies. Among the 10 Fintech companies that make up the list, we highlight the first five:
- Finizens: investment platform specialized in automated passive investment.
- InbestMe: an automated investment manager that allows the creation of different portfolios according to the profile.
- Finanbest: investment fund management platform that combines passive and active management.
- Degiro: worldwide online stock broker.
- MoneyMan: microloan company with a VIP loyalty program that influences the loan limit.
USA Fintech
Experts assure that our country, with more than 400 companies categorized as fintech, is well positioned to become a benchmark in this new branch of the financial sector.
A report published by EY on the reality of fintech in the USA in 2021 reveals that most of these companies, around 80%, are located in cities such as California and Los Angeles.
According to EY, our country has become the sixth-largest alternative financing market after achieving 15% growth during 2020. In fact, according to a McKinsey report, fintech companies moved 60 million dollars in our country last year.
Therefore, the sector is heading towards a more digital and remote model, more dynamic and agile, far from traditional banking structures, which has to reinvent itself if it does not want to become obsolete. Therefore, financial companies face a challenge that is not trivial and that to remain competitive, they will have to adapt, not only in terms of their structures but also in terms of the talent they have.
The new financial professional
The new financial executive Companies in the financial sector that do not know how to attract the finest individuals may struggle to compete sufficiently in this critical circumstances, missing out on the numerous chances that the long-awaited recovery will definitely provide.
The new financial professional that these times demand is characterized by having a series of competencies and skills in new technologies. Blockchain, Artificial Intelligence, or big data are becoming essential in an incomprehensible sector without innovation. Therefore, financial talent must always be trained in the new trends that the sector offers to be able to take advantage of all the possibilities offered by technology.
