What is fintech? This is a short but essential question to ask when it comes to modern finance. Fintech has made a massive impact on finance and banking, and understanding the nuances of fintech is critical for many businesses and industries.
Definition of Fintech
The simplest definition of fintech is financial technology. However, this definition does not completely capture fintech's scope and incredible role worldwide. Fintech spans many different aspects of financial services.
From payment processing to loans and remittances, fintech is about constant innovation and pushing the boundaries of financial services. At its core, fintech is centered around making financial services faster, more efficient, secure, and more accessible. Unsurprisingly, fintech has completely changed the nature of banking and financial services in the past several decades. Various innovations have entirely transformed how we interact with financial services.
By leveraging new technologies, fintech companies create new avenues for financial services. Fintech can take many forms, with many companies finding unique niches and ways to improve financial services.
Evolution of Fintech
Fintech's history is long and characterized by upheaval and innovation. Going back to when banks were moving money via telegram to today's financial ecosystem, there are many critical moments of fintech evolution.
Fintech began to take off in the 1990s with the spread of the Internet when companies and banks realized that this could change the nature of finance forever. Another essential moment of evolution was the 2008 financial crisis, which brought a new wave of regulations.
These new regulations created opportunities for companies to innovate and smooth out areas of friction within the financial sector. Additionally, the spread of cell phones globally has completely changed the game regarding accessibility. Fintech can reach billions of people globally with phones in the palm of their hands.
Fintech companies fill a unique role in banking and finance as they are partners and competitors with banks. Together, they can give customers the best innovative financial solutions, resulting in numerous productive partnerships.
Changing customer expectations has also been central to the evolution of fintech. More than ever, customers want real-time solutions that provide excellent customer service. Fintech companies are uniquely positioned to meet these new demands due to their lack of reliance on legacy technologies, unlike older established banks. 3
Customer Benefits
Without a doubt, customers have seen massive benefits from fintech. Customers widely use fintech apps, with more customers adopting fintech apps each year. Fintech companies are making services cheaper and faster. Customers also report that these companies make financial decisions more straightforward and less stressful.
Importantly, fintech solutions are making financial services far more accessible. This allows millions who were excluded from the banking system access to the services they need. In doing so, underserved communities and customers achieve their financial goals more effortlessly than ever.
Customers also appreciate the transparency that fintech provides. Financial products and information are no longer a mystery to customers who can control their finances more than ever.
Types of Fintech Companies
Payments
Without a doubt, payments are one of the most apparent examples of fintech's impact. Customers rarely use cash now as they rely more than ever on credit cards and digital payment options. Payment companies allow businesses to process these payments. In addition, payment services allow the average consumer to pay individuals or their bills digitally without having to use slower bank-based solutions.
Cryptocurrency
Fintech companies specializing in cryptocurrency are adding incredible layers of fraud prevention and transparency. Additionally, cutting out intermediaries with blockchain networks allows transactions to occur in real time without unnecessary fees. These companies are also poised to assist older businesses as they begin to adopt more and more blockchain technology.
Wealth Management
Unsurprisingly, fintech has been shaking up the nature of investment. Using real-time data and AI, new wealth management innovations are allowing investors and financial advisors to make smarter investment decisions. Additionally, these innovations are making it easier for average people to invest themselves.
Embedded Finance
Embedded financial solutions are an incredible way fintech is impacting many different industries. With embedded finance, nonfinancial companies are able to integrate financial services into their products and systems seamlessly. This allows customers to avoid unnecessary third parties. API integration is the primary way fintech companies offer embedded solutions. In doing so, companies are able to provide a smooth end-to-end customer experience.
Fintech Banks
Fintech banks offer unique and high-quality banking solutions to customers. By leaning on new innovations and staying away from legacy technologies, fintech banks are offering personal banking solutions with lower fees than more traditional banks. Lower costs allow fintech banks to serve underbanked customers who cannot pay conventional banking fees.
Under's Role in Fintech
Under.io plays a unique and essential role in the fintech space. One central pain point from payments to wealth management is the onboarding and underwriting process. Typically, various documents are required to complete the underwriting process successfully. Unfortunately, much of this relies on paper documents and legacy technologies that could be faster and more efficient.
This is where we provide various tools to streamline the underwriting process dramatically. We supply easy templates that allow companies to create and collect digital applications from potential customers. By digitizing the underwriting process, we enable companies to provide a smoother customer onboarding experience and stop fraudulent customer applications from the very start.
We accomplish this with various tools from KYC and KYB, allowing companies to verify customer information and identity quickly and accurately. Our service also permits companies to create a customized onboarding experience that best suits the needs of their customers.
We partner with other top-rated fintechs like Plaid and Middesk to provide our customers with the best solutions. These partnerships are essential and allow our clients to accurately collect, verify, and leverage information from prospective customers.
Final Thoughts
Fintech is a complicated and ever-changing sector as technology and customer expectations constantly change. Here at Under, we pride ourselves on continually seeking new ways to improve our underwriting and onboarding processes. Our customers deserve the cutting edge; at Under, we always provide the best.
