Financial Technology transforms financial system and services
Introduction
Fin-tech(financial technology) has to do with modern technology used to provide intriguing financial services and solutions to financial problems this involves so many applications as well as technology, and the major aim of financial technology is to facilitate all sectors of financial industry and make life easier.
Today one way or the other we are benefiting from this innovation.
How was life before financial Technology?
Life before Fintech.
To understand what life was like before financial technology imagine yourself in an environment or a location where you don't have access to internet connection it is always like the world is over you can't enjoy your stay over there and you can't do anything online.
So life was bored before financial technology though there were provisions on how to carry out financial services but majorly were manual process and more of physical infrastructure and physical interactions.
Some this manual process are paper-based transactions where people have to use paper checks some have to go to the bank to withdraw their cash before proceeding for any business transaction.
Then you always go to the bank physically and tell the bank what you want to do and that has to be during business hours because after business hours the bank is closed so you can see this manual process made life very toxic.
Having an emergency by 12:00 a.m. and there is no physical bank to withdraw money.
Because of this manual process there was little or no access to financial update and this as well affected the progress and growth of business, it makes it very difficult to keep accurate records of expenses even to set financial goals was not easy with those manual process.
Investment was also difficult because to buy stock there must be physical contact with a traditional broker and there is need for lot of paperworks.
Financial life wasn't improving with those manual processes.
Life with Fintech.
The evolution and introduction of financial technology gradually brought series of changes in the financial system and most importantly financial technology kept involving with modern day technology advancement.
Financial technology came into full use in the 21st century but before then it was gradually setting in in some countries.
Example it was in 1960s that ATM was introduced and people were able to use it to withdraw their money without writing checks in London.
In the year 1980s there was introduction of electronic banking where users are allowed to do some financial transactions with terminal computers then in the 2000 financial technology now became more prominent sweeping away all those traditional financial services and this brought rapid change and growth to businesses and made life more easier.
Features of financial technology.
There are so many features of financial technology.
- The cryptocurrencies and blockchain.
This are virtual currencies that are decentralized and they leverage Blockchain were all transaction are recorded in a immutable ledger and it uses cryptography for security example of cryptocurrency are Bitcoin, Altcoin and many more.
Cryptocurrency can be mined and also for payment of goods and services and it also experiences volatility, and can also be used for cross border transactions.
Cryptocurrency advances with technology and its reshaping the financial system and businesses.
- The digital payment platforms/ The mobile banking apps and wallet.
This has to do with electronic transactions that are conducted without exchange of physical cash like the online banking where you view your account online transfer money for goods and services without going to the bank to withdraw physical cash just with mobile application you are good to go.
Mobile wallet is also a digital payment platform like Google pay Apple pay and others all that is needed is just to type in your credit or debit card information through the use of your smartphone and with the use near field communication technology you can use your mobile wallet to pay for all goods and services there are also other digital platforms like paypal, cash app, stripe and many more all this digital payment platform enhances security and revolutionizes financial landscape
- The Central Bank digital currencies
This are country currencies that are in digital form like E.Naira and the rest there are Retail CBDC and interbank CBDC, they are also used for payments and services but unlike cryptocurrency that is decentralized CBDC,s are centralized,they controlled by central banks, they work so hard to reduce transaction fees, they also enhance financial inclusion but it faces some challenges due to its centralization.
There are also;
The regulatory technology.
Rebo- advisors which makes investments easier, instead of looking for a traditional broker investment management are automated, and this encourages investment and brings more investors.
Neo Banks and many more.
All these are key features and elements of fin tech, but what was life like before fin tech.
Conclusion.
The feature of financial system is going to be more smooth and successful because financial technology advances with blockchain technology the centralized finance and artificial intelligence which will help to reshape the financial system and how people manage their money and save more.
Are there some challenges facing financial technology?
Yes there are some challenges facing financial technology which includes data security, lack of tech experts and many more.
Whats the solution to this challenges?
Note images are mine