Fintechs role in society is becoming more vital than ever, particularly due to Covid-19. Whether it’s online payment systems like PayPal and Square or best forex broker apps like Robinhood or Acorns, chances are we’ve all used fintech in one way or another. In this article, we’ll look at five of the reasons why fintech is now so important.
Fintech Creates Financial Inclusion
Fintech can be used anywhere, by anyone. Meaning it becomes accessible to people who may never have taken advantage of financial services before. Continents like Africa are particularly benefiting from fintech, as providers like M-Pesa and Tala revolutionise how people manage their money. Through access to basic financial services such as mobile money and e-wallets, fintech companies are helping lift people out of poverty and create a more financially inclusive world. M-Pesa has already helped lift an impressive 194,000 households, or 2% of Kenyan households out of poverty.
Fintech is a More Cost-Effective Option
Fintech companies can often deliver the same solution for a lower price compared to traditional financial institutions. By leveraging technology to automate tasks, fintech companies can save money on employing people to do the work. They also save money by not having physical branches to service their customers. Overall, fintech companies usually have relatively low overhead costs, which allows them to pass the savings on to you. Today you can find bank accounts with no fees and stock trading apps with no commission. That means more money in your pocket.
Fintech is Safe and Secure
Some believe that fintech services are not particularly reliable when it comes to security. However, this is simply not true. It’s actually traditional banks and financial institutions that can be more susceptible to security issues due to their slow nature in adopting the latest technology and cybersecurity measures.
Fintech companies ensure that every transaction carried out on their platform is protected, which includes all customer data and personal information. In fact, many fintechs have introduced revolutionary features which are protecting users more than ever. From instant spending notifications to location-based security. Fintech companies do a pretty good job of keeping you and your information secure.
Fintech Empowers Small Businesses
Large businesses used to have the upper hand when it came to using the latest technological and financial tools. Fast forward to today, and this is no longer the case. Now even a solopreneur can use some of the tools that the big boys use, whether it’s processing payments through Square and Stripe or efficiently managing your accounting through Xero or QuickBooks. Innovative fintech products enable small businesses to expand their services further and operate at higher efficiency and scale.
Fintech Enhances Financial Capability
Whether it’s our personal finances or investments, fintech helps to simplify how we manage our money. Revolutionary startups like Robinhood and Chime are not only building the future of financial tools, but also promoting financial education and literacy. An improvement in people’s financial literacy will help more individuals reduce their debt, understand the value of budgeting and saving and the importance of investing for the future.