Raise your hand if you’ve heard the term FinTech. FinTech stands for Financial Technologies, pretty self-explanatory, right? It applies to all areas of the financial world, covering everything from peer-to-peer money transfer platforms like Zelle, loan marketplaces such as Lending Club and Funding Circle, to crowdfunding platforms like Kickstarter, and more. Remember just a few weeks ago when we talked about Venmo? That falls under the FinTech category.
I don’t want you to think this is just a millennial thing. FinTech is not a fad or a buzzword. According to Investopedia, one-third of consumers use two or more pieces of FinTech in their lives.
Some of the more popular areas of FinTech are cryptocurrency, open banking, cybersecurity, and the unbanked / underbanked. Basically, what is happening is consumers are dictating the way in which we are handling finances.
So how does this apply to your business? Well, just like we discussed with Venmo a few weeks ago, there are some other ways FinTech is infiltrating your business. It’s not just peer-to-peer payments that are impacting your business, but also the way in which we secure loans.
When cash is tight, banks take what feels like forever (i.e. weeks or months in some cases!) to get you approved and funded. In the FinTech world, that’s a thing of the past. Because of the FinTech world you can have funding within days, sometimes even the same day.
Remember those underbanked people I mentioned before? Well, banks require credit scores in the 700 range – not so in the FinTech space. We offer advances based on revenue and not credit. Banks also typically require years in business whereas technology-enabled funding companies require a few months in many cases.
Fintech is also changing consumer behavior. Consumers expect to be able to bank on their phones, use Apple pay and so many other things. At this point it’s almost inconvenient for the consumer when that option is not available. I know I’ve been to the store multiple times and have realized I left my wallet at home as I’m standing in the checkout line. Rather than panic, I shop at grocery stores where I can use my Apple pay right from my phone.
FinTech is infiltrating every aspect of our lives and it is crucial that your business adapt and get on board with FinTech to survive. As we become a more technology-dependent population it will be vital that businesses adapt and change to work with consumers the way they want to interact with your business.
Will your business adapt?