Fintech is all about innovation. Firms constantly strive to provide new, exciting, and more efficient ways to help consumers manage their money.
Reasons for Innovating
Over 50% of global consumers are relying on at least one fintech firm to manage their finances in some capacity. These firms are finding innovative ways to provide more value and service efficiency.
Fintech Innovations help consumers in a number of ways:
- They help to better identify the consumer. New advancements lets firms collect a wide range of information consumers and their habits, which can be used to improve the way these firms conduct their business.
- They make managing finances simpler. Finances have long mystified ordinary consumers. The technologies employed by fintech businesses are intended to make managing money simpler, so consumers can make sure their finances work better for them.
- They should be easy to use. New technologies should be so intuitive that they take away the "fear factor" for consumers. Fintech innovations must be more user-friendly than the technology they're replacing.
- They make financial data more secure. Ever since consumers started managing their money online, people have worried about the security of their data. Innovations are constantly improving security so that contemporary consumers can feel more confident with their online financial activities.
For smart firms, every fintech innovation employed is carefully considered against all these measures. Until a company can show that the new financial optimizing technology is better for consumers, they should continue to refine it so that it delivers exactly what individual and business consumers need.
According to the Silicon Valley Innovation Center, mobile devices are responsible for the rise of fintech. Fintech firms rose at a time when people were tired of banking in the branch or even from websites on their desktop computers. They wanted access to their money and data about their fiscal habits on their favorite mobile devices from wherever they were. At a time when mobile browsing outstrips desktop usage, innovative mobile fintech solutions are more important for reputable companies than ever before.
The Silicon Valley Innovation Center suggests that traditional financial institutions, including banks and credit unions, are "too big to adjust to customer expectations" and to adapt to this mobile technology. In contrast, emerging firms understand the expectations of modern consumers and the innovative mobile technology required to meet them.
Fintech firms have created a number of innovative mobile financial solutions, such as these:
- Mobile apps for partner banks and other financial institutions
- Peer-to-peer (P2P) payment platforms are for easy money transfers between friends, online auction winners, and small business owners and their customers.
- Business-to-consumer payment platforms offer similar payment options to P2P services, but they are targeted at business users and their customers.
- Digital-only banks operate entirely online to reduce their overhead and offer customers a better deal.
- Mobile wallets allow consumers to access their money and pay for transactions directly from their mobile devices.
In addition, fintech mobile solutions can work in conjunction with other business products. For example, fintech mobile can put insurtechs, an innovative new insurance product, and robo-advisors, which help investors make better investment decisions, in the pockets of mobile users.
Finances In the Cloud
Cloud technology is one innovation facilitating mobile financial solutions. However, the cloud isn't only useful when consumers are on the move. People also enjoy the way cloud technology lets them access their financial records anywhere they are, from any device. So they can move seamlessly and without disruption from their smartphone on their morning commute to the desktop they use at work.
Convenience is a key selling point for moving financial products to the cloud; however, security will always be a concern. Modern cloud providers offer rigorous security measures to help keep individual consumer and business data safe. Here are some of them:
- Cloud firewalls: Firewalls managed on a cloud server that give only authorized people access to information
- Cloud Access Security Broker (CASB): A software tool placed between cloud consumers and providers that acts as an enforcement point for cloud security policies
- Two-step verification: Users must prove their identity twice to access their information on the cloud; for example, by entering a password and then a code sent to a mobile device.
- Cloud data encryption: Protects sensitive data by scrambling it to make it unreadable to casual observers without the right decryption tools
- Cloud backup and recovery: Protected copies are made and stored in another location where they can be maintained and recovered in case there's a problem with the original records.
While security measures like these help users breathe a little easier, so does the acceptance that comes with continued use. Contemporary consumers are becoming very familiar with cloud computing through popular programs like DropBox, Google Drive, and Microsoft OneDrive. This familiarity fosters acceptance that helps dispel many of the fears surrounding cloud technology.
Fintech disruptors are also using cloud innovations to improve their own business practices. Cloud computing helps firms streamline the processes and gives their employees the flexibility to work anywhere they choose. Cloud computing also lets employees access real-time analytics about the business from home, at client meetings, or from any place they need current information.