by Lucy Lee
Financial technology or fintech for short is extremely beneficial for businesses due to its widespread utility. It refers to software, algorithms, and applications that are used on desktop and mobile platforms. These are used to manage investments, deposit checks, move money across accounts, and make payments. Without being aware of it, almost all consumers use fintech on a daily basis. However, it also provides many benefits to businesses for back-end and front-end processes. For instance, Bo J. Howell explains how automation has lowered transaction costs for investors, such as zero-fee ETFs, giving some businesses a competitive edge. In addition, it gives investors more options for managing their assets. It is also helping business in many other ways:
Improves customer relationships
Almost all businesses operate on a customer-first strategy. One major benefit of fintech is that it provides business with useful insights into customer habits. For instance, data from payment processing technology can show trends related to customers’ interests, wants, and needs. This data can be used to craft more impactful marketing strategies to capture a larger target market. In addition, some platforms go beyond what traditional POS machines have to offer. For example, they can come with customer engagement features such as private messaging chat, track the number of visits customers make, and even create automated customer feedback requests. Applying positive changes based on this data can then help businesses better serve their customers. Similarly, robo-advisers such as Marstone, Save®, and Evati are changing the way consumers save and invest assets. Investors are increasingly looking for asset managers that leverage technology to improve performance and customer experience.
Helps resolve cash flow problems
For small businesses, cash flow problems are a common issue that prevents growth and expansion. Entrepreneur describes how technology can remove these roadblocks through things like customer invoicing. Generating invoices online and automatic follow-ups on software can reduce the workload needed to track down payments. In addition, one-step checkout mechanisms are making it easier for customers to purchase goods, saving time for companies as well. To add to this, a Forbes article explains how fintech expedites processes like generating credit score reports and money transfers that once took days or weeks. Platforms streamline these processes by making them occur in a fraction of the time, helping businesses gain the funds and insights they need.
Can lead to cross-border growth and expansion
For businesses that are looking to expand into foreign markets, using multiple currencies may be necessary. A Mckinsey report on the future of cross-border payments describes how many non-banking firms can't accommodate the liquidity requirements necessary to manage large payments related to international trade, direct investments, or high-volume commerce. To help generate these funds, FXCM describes the flexibility of forex trading and how it enables businesses to implement a variety of trading strategies for optimum money-making potential. By moving foreign currencies across countries and continents at the right time, businesses can generate further growth and expansion for their other branches or subsidiaries.
Although the benefits of fintech are numerous, it may be a struggle for asset managers to overcome their initial resistance to new technology. A case study published by Financial Management Magazine presents several solutions to remedy this issue. For one, organizations need to clearly present a narrative to explain the benefits behind automated systems. For many individuals, the fear of unemployment or pay cuts is very demotivating. However, identifying their capabilities and how these can work alongside fintech is the key. Providing hands-on training and coaching will help them step out of their comfort zones during this transformation.
In today’s pandemic-hit world, employing fintech across all areas of your business is more vital than ever. Fintech Magazine elaborates on how contactless payments have been driven by necessity and are key to preventing the spread of the virus. Businesses should take the initiative to harness the power of technology to find solutions to various pain points in existing systems and solutions. Adding value to the lives of consumers by making processes faster, more useful, more affordable, and more accessible is something that all businesses need to focus on to succeed.