Business 101: FinTech

Technology has revolutionised almost every aspect of modern life. However, its uses in business have been particularly transformative. One such area that has seen significant expansion is that of financial technology or fintech. This new wave of technology has fundamentally changed the business landscape. It has uses for all forms of business, from huge conglomerates to small independent businesses. Keep reading to find out more.

FinTech Explained

As mentioned above, fintech is a portmanteau of the words financial and technology. Fintech refers to a combination of computer science, technological innovation and information systems designed to offer new solutions to traditional financial services both personally and commercially. Each new advancement in fintech is designed to deliver efficient, innovative solutions to the marketplace in comparison to the traditional and often outdated or even obsolete methods that have come before. As a result, it would be difficult for a company to navigate the business landscape without taking advantage of at least a few elements of fintech.

Commercial Uses

While it is true that fintech has also revolutionised aspects of the personal finance sector – take the rise of online banking as an example. However, the advances in commercial, financial services are perhaps even more influential. Money management is easier than ever before for businesses. By employing the right solutions, even business owners with a rudimentary financial knowledge can excel in taking care of their business’s financial needs. 

There are a huge number of uses when it comes to the commercial applications of fintech. Even small businesses can benefit from fintech and the digitalisation of money management, perhaps even more so than bigger businesses who benefit from a higher budget and better capabilities in terms of hiring financial help. For example, Payhawk provides visa company cards, expense and invoice management, as well as reimbursement, making money management a lot easier, especially for small business owners who are spread thin as it is. Their blog – which you can find at https://payhawk.com/blog/ – is also incredibly insightful and informative. 

Payment Management Applications

The most common forms of payment continue to be credit, debit and cash – although there has been a rise in the use of digital currency in recent years. While the use of cryptocurrency as a form of payment is still somewhat rare, it is increasing, and as such, there are a number of emerging fintech programmes that are designed to accommodate this. As a result, most fintech solutions tend to focus on payment management, specifically managing the aforementioned payment options electronically. This is done in a number of ways.

Firstly, via point of sale or POS systems. They are often designed to allow a business to merge their operating systems, combining inventory management systems with marketing insights and financial management. POS systems can be in the form of hardware, software or virtual technology, with some forms merging all three capabilities. 

There is also automated cash management solutions. These technologies are designed to streamline the process of handling cash by automating cash management tasks. The solutions include technologies like smart safes, which can digitally count their own contents, verify the results and keep a record of them. There are also automatic note and coin recyclers and dispensers. Oftentimes for security purposes, these technologies are tied to other finance businesses which regulate and maintain these services. They also tend to send armoured carriers to drop off any change orders and pick up cash that needs to be deposited.

Fintech is also responsible for the digitalisation of buy now pay later schemes. The programmes are designed to allow consumers extra time to pay for their purchases. The extension on payments can verge from days to months. There are whole businesses that work in tandem with retail businesses to provide consumers with more payment options. Think Klarna or Clearpay. As with almost every technological advancement, it was driven out of the pursuit of convenience, although this convenience is geared more towards consumers than business operators.

Debt Financing Solutions

Fintech advancements have also made it a lot easier for small businesses to secure capital. There has been a rise in lenders and cash advance businesses. A business’s sales volume, assets, and credit score are used to determine how much capital it is eligible to receive. The amounts themselves vary wildly from a few thousand to a few hundred thousand. The application process is easily accessed with an internet connection. However, alongside the emergence of these companies, seedier elements have also seen an increase too. This is why reading the small print is key to determining the viability of these loan prospects. For example, the interest rates for some might be sky high, and therefore they are not a sustainable option.

The Takeaway

The fact of the matter is that fintech is a relatively new concept. The number of solutions and technologies available both personally and professionally will continue as technology advances. Fintech has truly been transformative; it has overhauled money management techniques and changed the very landscape of business practices.

Photo credits: eOffice