Nowadays finance news is abuzz with the latest ‘FinTech’ to emerge and as much as many people aren’t quite sure what it is, most can’t help but wonder whether or not they should be looking into it and starting to take advantage of it.
Essentially ‘FinTech’ is more or less an umbrella term that is being used to describe any and all software that provides financial services (that is not run by a bank or insurance firm). Odds are you’re already using some sort of ‘FinTech’ already, since services such as PayPal, Square, and Apple Pay fall under this umbrella.
That being said, payment solutions are really just one aspect of FinTech, and it actually covers a huge array of other areas ranging from peer-to-peer lending, stock trading, cross border money transfer, and so on.
On the surface, the main goal of FinTech is something that most people can get on board: It aims to simplify financial services using technology, so that you (the consumer) have a better, more convenient, faster, and more efficient experience. In addition to all that, most FinTech companies are also able to charge less than their conventional counterparts – so their fees and commissions tend to be lower too.
However at the same time there are also questions that are being raised of FinTech services – and most of them center around the fact that FinTech tends to operate in a regulatory purgatory of sorts. Essentially most of the current financial regulators are ill-equipped to deal with FinTech and so any safeguards that are in place may not apply. In the worst case scenario that could make FinTech the next ‘credit crisis’ in the making.
For the time being though, the fact is that FinTech is becoming more popular and its growth is expected to continue well into 2016. For consumers, using most FinTech services is really all about convenience – and the risk tends to be non-existent or low in most cases. Of course for some (such as peer-to-peer lending), more careful scrutiny needs to be taken before deciding whether or not to jump on board.
At this stage the best policy is to take advantage of FinTech as and when you feel it can help – whether it is simply to allow you to make payments more conveniently or manage your finances. More than anything else, it is worth keeping an eye out for future developments that may impact the financial scene in more ways than one.
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