We have entered the most profound era of change for financial services companies since the 1970s brought us index mutual funds, discount brokers and ATMs.
No firm is immune from the coming disruption and every company must have a strategy to harness the powerful advantages of the new financial technology (“fintech”) revolution.
If there’s one area that a lot of people agree has the potential to impact a lot of Nigerians; it’s Fintech. While there’s no universally accepted definition for Fintech; its acknowledged to cover tech startups focused on mobile money, payments, money transfers, loans, fundraising etc.
Financial technology is emerging industry providing financial services, it encompasses innovation into transacting process, mobile banking, machine learning, e-wallet and many more conveniences to users. Fintech, is a line of business based on using software to provide financial services. Financial technology companies are generally startups founded with the purpose of disrupting traditional approach of providing financial services. Basically a technology innovation in the way we bank, invest and raise money
The battle already underway will create surprising winners and stunned losers among some of the most powerful names in the financial world. The most contentious conflicts (and partnerships) will be between startups that are completely re-engineering decades-old practices, traditional power players who are furiously trying to adapt with their own innovations, and total disruption of established technology & processes.
Fintech Products and Services
Fintechs have multiple product lines, below are some of the prominent ones:
Peer to peer lending: sometimes abbreviated P2P lending, is the practice of lending money to individuals or businesses through online services that match lenders directly with borrowers. Since the peer-to-peer lending companies offering these services operate entirely online, they can run with lower overhead and provide the service more cheaply than traditional financial institutions. P2P lending company has taken a fee for providing the match-making platform and credit checking the borrower. Examples of Fintechs offering this services are lending club, funding circle, Zoppar, Propser etc.
Mobile wallets: The huge market penetration of smartphones is driving innovation in “mobile wallets”, which enable consumers to make payments via their mobile phones. For example, if a digitized version of a credit card is stored within a mobile wallet and used to make a payment, banks can link the card number to the user’s account and thereby authorize the transaction
Payments/Billing Tech: one of the major solutions of Fintechs are payment and billing technology. Fintech payments and billing companies span from solutions to automate payments processing system, direct debit and invoicing billing system, subscription billing software tools and many more. Fris like paypal, interswitch,
Personal Finance/Asset Management: Private tech companies that help individuals manage their personal bills, accounts and/or credit as well as manage their personal assets and investments.Visible.vc
Money Transfer/Remittance: private money transfer companies include primarily peer-to-peer platforms to transfer money between individuals across countries.
Institutional tools: Fintechs are providing financial institutions such as banks, hedge funds, mutual funds or other institutional investors. These range from alternative trading systems to financial modeling and analysis software.
Equity crowdfunding: Crowdfunding is a form of alternative finance, which has emerged outside of the traditional financial system. It is a practice of funding a project or venture by raising monetary contributions from a large number of people to finance a project or business. Fintechs Platforms allows a collection of individuals to provide monetary contributions for projects or companies provisioned in the form of equity.
Digital currency: Digital currency or virtual money is an Internet-based medium of exchange distinct from physical (such as banknotes and coins) that exhibits properties similar to physical currencies, but allows for instantaneous transactions and borderless transfer-of-ownership. It is an alternative currencies, which one can design a currency for any group of individuals that share a common objective. The currencies can have a local focus to enhance the resilience of the local economy, can be for a sector like energy, healthcare, education or a currency for sustainable energy. Bitcoin is the most well-known, using a P2P structure that facilitates transactions between parties without the need for an intermediary. The Bitcoin payment infrastructure operates by converting in and out of fiat currency, and incurs much lower fees than traditional credit card-based transactions. Yet with the majority of solutions currently requiring consumers to explicitly buy and sell Bitcoin or other digital currencies, this creates a substantial barrier to adoption.