No doubt, technology has made a huge difference in the financial sector. Also, businesses and individuals get their money faster, and it’s more convenient. Fintech, or financial technology, is the major contributor to these amazing changes in the finance sector. There are several financial applications and new forms of making and receiving payments.
Even with the Fintech industry growing, there are still a lot of issues that need to be resolved. The purpose of highlighting these Fintech problems is for companies to grab the opportunity and create a permanent solution.
Payment Options
Even though people now have access to better payment options, more need to be created. No doubt, in the last 10 years, fintech has made remarkable contributions by providing some of the best payment options. In the past, the traditional payment options that were available were checks, bank drafts, withdrawals, and deposit slips. Now with a few clicks, you can send and receive funds from any mobile device. Also, convenience has reposed a lot of confidence in the fintech industry.
Security
The fact that there are better payment options has not guaranteed the safety of people’s financial information. The concern about protecting financial data is growing, and the traditional use of PINs seem not to be enough. Hackers are devising new ways to steal financial information and then have access to your funds. Nowadays, it is easy to guess a four or five-digit PIN.
However, fintech has incorporated biometric security measures to personalize the security of an individual’s data. For example, before access can be made on certain platforms, you must make a fingerprint identification. ATMs and financial apps scan fingerprints and also request a PIN. Also, voice recognition and iris scanning are currently used to ensure data protection.
Access to Finance
In the past, getting a loan was hellish, and the requirements were rigid. You need a credit history and provide various documents to show you are credible to get it. Start-ups had to accept unpleasant loan conditions to get access to funds to finance their business.
Nowadays, fintech programs have removed so many bottlenecks that made accessing loans very difficult. Most of the traditional barriers have been waived because of the growth of the fintech industry. Fintech has made it possible for borrowers with bad credit history to access funds. In the past, with a bad credit history, traditional banking systems would not give you loans. However, the interest rates vary and depend on the fintech company you choose to use.
Reaching the Unbanked
According to a financial report, more than 1.7 billion people in the world do not have bank accounts. The number of unbanked people was quite high in the early 2000s. One of the reasons people don’t open bank accounts is because they don’t have access to banking facilities or don’t trust the system. Also, the stress of opening an account demoralizes a lot of people.
Now that you have your mobile number, you can open a bank account with a traditional bank or various online banking platforms. Customers no longer have to stand in lines to access their hard-earned money.
In the past, to withdraw your money, you had to visit the banking hall. Now you can send and receive money with your ATM without entering the banking hall. Surprisingly, some online banking platforms don’t even require a minimum amount to open an account.
Limited Access to Investing
More people are interested in investing their funds because they can literally see it grow or decrease through the apps on their smartphones. In the past, a lot of people were skeptical about investing because they were not sure if they would get their money back. Nowadays, banks have created investment apps that show you every move they make with your money. With all these innovations, more people are willing to invest their funds.
Conclusion
About 20 years ago, it could take more than two weeks to close out a deal of about a few million of dollars. Presently, with just a few clicks, you can send and receive billions. Fintech is the major driver of improvements in the financial world. Nevertheless, the primary concern remains the security of people’s financial data. Finally, some of the solutions to these fintech problems will be discussed in the unicorn nest in Luxembourg.
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