FinTech is a term that refers to the combination of financial services and technology. It’s often used to describe the use of technology in the financial sector, but it can also refer to digital versions of traditional financial services like banking, insurance, or brokerage. The goal of FinTech is to make these services more efficient and accessible for customers. Because FinTech companies are often small startups with little resources, they’re generally considered ‘disrupters’ within the industry. This means that they tend not only to introduce new technologies into an existing market (e.g., online lending), but also change how people interact with those industries entirely (e.g., by enabling consumers who don’t have access to traditional bank accounts).
What is FinTech?
FinTech is a broad term that covers many different areas of finance. It’s a recent phenomenon, with the first FinTech companies appearing in the 2000s and growing exponentially since then.
But what does FinTech actually mean?
The term “FinTech” can be used to describe any use of technology in the financial sector. For example, it might refer to:
- Payments (e.g., Apple Pay) and money transfers (e.g., TransferWise);
- Investment management tools like robo-advisors or trading apps (e.g., Robinhood);
- Credit scoring services like Affirm.
FinTech is a growing industry that offers many benefits to both consumers and businesses.
For example, it can help people save money on their loans by providing lower interest rates, or it can make it easier for them to access financial services in general by providing an app that allows them to check their balance without having to go into the bank.
Laws in numerous countries haven’t adapted quickly enough to the swiftly evolving realm of digital finance. This lag has led to regulatory hurdles and uncertainties for startups operating in this field. Consequently, having a specialist in fintech lawyer is imperative for the team of such companies to navigate these challenges effectively.
How did FinTech start?
FinTech is a broad term that covers all types of financial technology. It’s a new way of doing things, but it’s not just about online banking. FinTech is about using technology to make the financial system more efficient, secure and accessible.
For example, if you want to transfer money from one bank account to another through your smartphone app today, there are three steps involved: First you need access to both accounts–the one sending money and the one receiving it (you can’t send money from someone else’s account). Second, you need an Internet connection so that your phone can communicate with these banks’ servers over the web. Thirdly…well…you have no idea how many days this process might take because there aren’t any standards for how long it should take! Some banks don’t even allow transfers between accounts unless both parties have been customers for years.
Setting up a Fintech business
The first step to setting up a successful FinTech business is to identify an attractive niche. This starts with finding a problem that needs solving. That could be for a particular group of people, or a geographic area.
Successful Fintech ventures have been set up in the realms of: payment services, crowdfunding, blockchain and cryptocurrency, banking, wealth management, price comparison, accounting and personal finance management. Within each of those areas there is massive scope for niche products to better serve particular groups. For example accounting products for specific industries like care homes or media companies.
Next, you need to really understand the regulatory environment. The UK has one of the most attractive legislative environments for FinTech and has produced world-class startups like Revolut and Monzo. Cyprus is growing as a location for FinTech due to it’s attractive tax laws and the access it provides to the EU market.
Wherever you start, getting the right team of specialists is key. That includes technical specialists, developers and designers to help you build your platform. It also includes marketing and legal expertise.You can avoid pitfalls during Cyprus company registration by working with a finTech lawyer.
Finally, getting started in FinTech is rarely cheap or straightforward. You will need funding and to attract investors who provide knowledge and connections as well as finance.
The FinTech industry is booming, with an estimated market value of £10 billion. FinTech is a rapidly growing area that has the potential to change the way we manage our lives and do business. It’s important to know what FinTech is, where there are opportunities, and how it works so that you can stay ahead of the curve in this fast-paced world.