How Technology is Changing the Financial Industry
- July 29, 2019
- By Aidan Dwyer
The days of waiting in long lines at the bank are over. Technology is changing the financial industry for the better. The word FinTech is a new term that is essentially the marriage between finance and technology. Over the past few years, hundreds of financial applications have appeared on mobile app stores decentralizing the financial industry.Â
Prior to FinTech, only large, centralized banks and credit unions existed as a means for personal and business financing. Only companies with large amounts of funding could survive in the market. Recent technology and innovation has changed the game.Â FinTech has been a huge catalyst for smaller companies. These smaller companies are now able to survive by finding their niche in the financial industry.Â
After the financial crisis of 2008, many people lost their trust in big banks.Â This created opportunities for smaller alternative financial institutions to come into the market. This expansion of the market has been great for businesses and consumers alike because there is an abundance of companies trying to provide them with the best possible financial services.Â
The innovation in the FinTech market has been driven by consumer preferences. People want access to their financials in a quick and secure fashion, and FinTech companies are constantly striving to fill their demands. FinTech has also opened the door for already established technology companies to enter the financial market. Companies such as Apple and Google offer ease of payment methods that don’t require consumers to take out a wallet.Â
How it Works?Â
The underlying power behind FinTech is data analytics. Technological advances in data analytics have made it easier for financial institutions to track and pursue the right potential customers. Innovations such as SEO keywords and cookies have allowed businesses to track what types of e-marketing and e-commerce tactics work best at turning potential customers to actual clients. It has also allowed businesses to track consumer preferences and mold their products and services to fit consumer demand. This shift from product oriented marketing to consumer oriented marketing has been mutually beneficial to buyers and sellers alike.Â
Another way in which FinTech has changed the financial industry is that it has allowed more consumers to become investors. Prior to FinTech, the only way to gain funding for a startup or small business was to go through venture capitalists or traditional banks. Now, apps like Robinhood and Acorns allow everyday consumers to invest in publicly traded companies from their phones, completely cutting out the broker. Crowdfunding applications allow startups to gain the necessary funds. These apps work well for popular products that attract a large amount of consumer attention.
For smaller businesses that do not garner the attention necessary to gain the funding that they need, there are still options besides going to a traditional bank. Alternative lenders allow small businesses to gain working capital and expansion financing without going through a traditional bank. If you are a small business owner who needs financing for your business, we here at REIL Capital understand your needs. Fill out our commitment free applicationÂ to see if we can assist your business.