Fintechs are a response to the financial needs of companies and individuals, as they provide services faster and more efficiently than ever before. If you want to know its features and benefits in depth, stay here, because we share everything you need to know about the fintech industry.
What is Fintech?
Fintechs also known as Financial Technology refers to financial services companies that incorporate the use of technology to improve their functions and delivery to their customers.
It describes a variety of financial activities from transferring money to raising money for a business, to depositing money and generally running a business, without the help of another individual.
Fintechs compete with traditional banking and financial services, as they contribute to making their access and use faster and easier for users. This also guarantees more people access to these types of products.
The objective of a fintech is to digitize financial services and products in general. Since they are very quick and effective, they serve a larger audience at the same time. They strive to make the user's experience very comfortable. This is notably even from how they design their platform's interface to be user-friendly and automatic.
How does a fintech work and what are its characteristics?
•Fintechs are usually fast-growing start-ups. They offer easy accessibility and foolproof products.
•They have a dangerous business model but have a high return on investment if successful.
•They provide transparency for their process and products using information technology.
•They usually have digital platforms where their customers have the opportunity to carry out operations and also have access to relevant Information immediately.
•They are considered disruptive because they break old traditions and promote change.
•They are expandable. They usually start up by offering a particular service and then they proceed to expand their services and their reach. This also makes them dynamic, creative, adaptive and flexible.
•They have a highly competitive market.
•They offer simple, easy-to-use, convenient customer-focused products. They make the user experience as simple and easy as possible.
•They implement advanced technologies for security measures, customer intelligence, process automation etc.
Main types of fintechs
Because fintechs have different approaches and solutions according to their types of clients, here are the most common:
•Financing and Factoring: These are fintech focused on helping businesses obtain financing in advance based on their invoices and other things.
•Lending/Loan Companies:These companies give businesses or individuals access to loans through an easier automated process instead of the stressful structure presented by the traditional method.
•Savings Companies: These are companies that offer you a platform to save your money using different methods like the piggy bank saving method, the stock investment method and the traditional banking method. Sometimes, they offer a higher interest rate than your bank's saving account. They might even come with features that help you better like creating a target amount or locking your money to prevent access for some time.
•Trading and Investment Companies: These are companies that offer you a chance to buy and trade stocks, and bonds online. Some of these companies even run on an International scale, closing the gap and giving you a chance to buy and trade stocks, bonds etc with international companies.
Payment Service Provider: These are electronic payment providers. They are fundamental for virtual commerce operations and are used to carry out transactions between a customer and a supplier in a secure way.
•Fundraising: These are companies that allow individuals or businesses to raise funds in an innovative way such as crowdfunding. This gives users the chance to raise funds without having to turn to the traditional financial institution. People can come together and contribute money towards a good cause. It is usually a form of charity where no interest is expected.
•Cryptocurrency/Blockchain: These are companies that offer operations on digital currencies like trading of digital currencies, exchange, electronic payment etc. They also secure transactions and protect data.
•Insurance: These are companies that provide you with various insurance information and even help you to set up your insurance plan, all from the comfort of your home. They can allow you to compare different insurance companies and choose which one best works for you without having to leave your house.
•International Money Transfer: These are companies that specially provide the means to send and receive money from outside the country that you live in. Sometimes they also fall under payment services providers.
Examples of Nigerian fintechs
Of course, there are Nigerian fintechs that are already attracting the attention of users. Some of the most relevant are:
•Bridger: This is an online Financing company. At Bridger, we provide supply chain financing to customers who need them. Our goal is to bring B2B payments online.
•Flutterwave: Established in 2018, Flutterwave is a fintech company that provides a payment infrastructure for global merchants and payment service providers across the continent.
•Paystack: This is an online payment portal that makes it easy for merchants to accept credit and debit card payments online from users or customers.
•Carbon: This is a digital financial service platform that deals in customer lending.
•Piggy Vest: This is a secure online saving platform that allows you to save your money with methods different from a regular bank savings account.
•Interswitch: This is a digital payment platform concerned with the electronic circulation of money
•Remita: This is a payment solution company that lets you view all your bank balances, easily transfer money to one or more beneficiaries, pay bills, view detailed transaction reports on the go and much more.
•Binance: This is a company that provides users with the platform to buy and sell cryptocurrency online.
•GoFundMe: This is a funding platform where people from different places come online to contribute money to a good cause.
How do fintechs benefit users in general?
Some of the benefits of fintech include:
•Convenience: They make it possible to perform financial operations from the comforts of your home. You can even buy from online stores and get them without leaving where you are.
•Access: They create access to financial products and services that the customers/users had no previous access to.
•Efficiency: Their services are digital, simple, stress-free and available round the clock.
•User-Friendly and Helpful: They are very easy to use and have platforms that can offer automated advice on topics like financial management, investment etc.
•Transparency: You can predict the cost of using a service offered because fintechs allow for transparency, letting you know the fees attached to every service they offer.
• A user can always access what exactly they need because of the flexibility of the company or its products. They target making personal services.
Stay tuned for fintechs in Nigeria and in the world. You will see that innovative solutions appear every day, which guarantee that we all have access to healthy and growing finances