Concept in Definition ABC

This term is formed from the contraction of two English words: finance and technology. This name refers to financial services companies that use new technologies to offer services or products similar to those offered by traditional banking, and, given the advantages of the revolutionary field of software and Internet, maximize it.

Fintech main business areas

These companies are normally startups, that is, businesses based on the innovation technological. They are normally dedicated to the following areas:

- Payments through digital platforms and transactions.

- Consulting platforms and commercialization for investors.

- Management finance personal.

- New approaches to financing and granting credits.

The traditional banking sector is in decline as a result of the fintech boom

Fintech companies combine two services: money management and technology. Users have at their disposal a wide range of opportunities that in many cases complement traditional banking.

Its main objective is to reduce the costs of conventional banking. To do this, they use some strategies: the use of apps in mobile banking, knowledge of big data as a tool in predictive models, cryptocurrencies, crowdfunding or the automated management of processes.

Fintech companies are growing significantly in recent years and are already a competence direct to traditional banking. The new banking sector is highly valued by millennials, a sector of the population that they are digital natives and that they use new technologies with absolute normality.

Digital financial services have great advantages for the user, but they still cause some doubts among consumers

Fintech companies provide tools that save time in procedures and this circumstance facilitates the different operations of users and companies. The use of the services is designed so that it can be managed from anywhere and at any time. On the other hand, automated processes allow greater efficiency, both for companies and users.

Online transactions generate uncertainties, since the destination of the data is unknown and the consumer may have doubts about the safety of the platforms. In order to avoid these risks, countries like Mexico have approved a law to regulate the fintech business sector. These 100 percent digital banks have revolutionized the banking sector, but their regulation has not yet become widespread.

Finally, some sectors of society distrust the new platforms and do not want to assume any type of risk related to their money.

Photos: Fotolia - Sergey Tarasov / Aurielaki