If there’s one thing that most of us can use in our lives, it’s help with finances. We may complain and lament over the lack of education and financial literacy in our public education system but complaining rarely leads to solutions. When we lack the knowledge required to create a budget, balance a checkbook or file taxes – and want to do something about it – we look for help.
Many turn to Google, knowledgeable peers or financial advisors with their questions. Now, individuals and businesses are looking to financial technology to provide essential financial services and transform the way we approach money management.
What is FinTech?
Financial Technology, or FinTech for short, is the digitization of financial services normally provided by banks, credit card companies, credit unions, investment banking and other businesses within the finance industry.
On the surface, this may look like the difference between logging into your bank account to see your monthly statement and using a third-party application, like Mint or YNAB. These financial applications help you manage all your bills, transactions, credit card balances, paychecks, and bank accounts in one place.
But if we look deeper, there are more financial technologies providing alternatives to traditional financial methods and financial services, further democratizing and segmenting the financial sector.
Types of FinTech
The various types of financial technology offerings are vast, from personal to corporate finance management. By honing in on different parts of the financial sector, private businesses can compete with traditional financial services – like those offered by major U.S. banks – through FinTech software solutions and focused, quality tools.
A few main types of FinTech services include:
- Money transfer and payments (Venmo, Paypal, Zelle)
- Savings and investments (Qapital, Marcus)
- Budgeting and financial planning (Mint, YNAB)
- Insurance (Lemonade)
- Borrowing (Lending Tree, Lending Club)
- Business Accounting and Financial (QuickBooks, NetSuite, SAP)
In recent years, the adoption of FinTech software solutions by users has increased globally in every category. As one of the most commonly used FinTech services, the total transaction value of digital payments was reported to be valued around $880 billion in 2018. The FinTech industry overall is experiencing an 8.6% cumulative average growth rate that is projected to continue through 2023.
Benefits of FinTech for Personal Finance Management
From financial planning and budgeting to balancing a checkbook, we may strive to be diligent but find ourselves in over our heads. We may be interested in stocks and investments but have no idea where to begin. These are the opportunities that spark the creation of FinTech companies.
1. Managing Credit Card Spending
It is easy and dangerous to become accustomed to using credit cards for purchases before having the money in the bank to do so. Electronic payments and credit cards don’t give us the same psychological reaction — the pain of the purchase — as handing over cash, which can encourage dangerous overspending.
2. Prevent Fraud Through Proper Financial Security Protocols
Financial security is also important. Disregarding proper financial security protocols can have massive implications, such as damage to your credit score and loan disapprovals. This makes selecting FinTech tools with effective security measures essential.
3. Creating a Comprehensive Money Management System
FinTech mobile apps allow users to monitor their spending so that they can use their money more wisely. Others are used to help manage finances, set finance goals, track bills and make automated payments.
In addition to managing regular spending and preventing fraud, financial management throughout the year can also simplify the process of filing taxes, preventing unwanted “surprises” when reviewing your yearly expenses and contributions.
4. Effective Retirement Planning for All Budgets
Many prefer not to think about retirement funds or put off investing with the intention to get to it “later.” Financial technology makes these topics seem manageable, helping individuals start small in order to understand the power of consistency and the compounding effect of small investments over time. Further, one of the greatest benefits of financial technology is the democratization of the financial sector, offering affordable financial guidance and services to individuals regardless of income.
Is FinTech Useful?
FinTech greatly simplifies financial management, empowering users to effectively manage their finances. Rather than fumbling through cumbersome spreadsheets and paper receipts, FinTech solutions allow users to streamline their money management, saving them time and preventing user errors.
Examples of FinTech Companies for Personal Financial Management
Here are a few examples of FinTech companies for personal finance management:
- Acorns is a company that focuses on micro-investing, rounding up users’ day-to-day transactions and investing the change that accumulates over time.
- Robinhood is a stock trading company that offers users commission-free investing in public companies and cryptocurrency purchasing.
- Mint is a personal financial management company whose mobile app helps users track their financial data from budgets to bills and even their credit score.
- Venmo is a “digital wallet” or mobile payment service for peer-to-peer transactions.
There are a multitude of FinTech companies available, and these examples only scratch the surface of their capabilities. However, there are also FinTech companies that are focused on financial services for corporate or enterprise-level businesses.
Examples of Corporate Financial Technology Companies
Just like individuals, businesses also find themselves in need of financial services, financial advising, and resources and tools to manage their financial operations – from payroll to accounts receivable. CapitalWorks is one such company that, as a private equity firm, connects private businesses to untapped capital, growth strategies, and exit options.
Paypal for business offers secure transactions for companies of all sizes. Braintree, a PayPal Service, is a payment platform that supports “PayPal, Venmo (in the US), credit and debit cards, and popular digital wallets like Apple Pay and Google Pay in a single, seamless integration.”
Suplari is a Seattle startup that offers analytics services to identify, “spend reduction, cash flow, compliance, and risk opportunities.”
And the list goes on! From FinTech mobile apps and software to integrated financial technology solutions, FinTech companies provide individuals and businesses with the tools they need to remove financial blindspots and take charge of their financial operations.
Achieving Digital Transformation
If your business is in the financial sector, 7T can help you achieve digital transformation through FinTech software development. In the last 24-months alone, 7T has helped launch five FinTech platforms into the market. Our “Business First, Technology Follows” approach to software consulting means that our team works to truly understand your business before we begin to craft the perfect, customized solution.
Our Dallas-based team specializes in software and mobile app development, cloud and system integrations, data lake creation and data governance. We can help you innovate in order to scale your business and increase competitiveness in your industry. To discuss your development project, reach out to 7T today.