Regardless of the area in which we work, the use of technology is of great importance because it allows us to streamline processes and obtain fast and accurate results. In the case of finance, this is no exception and that is why we will show you the influence of FinTech in the financial industry.
What is FinTech?
FinTech is the result of a combination of two words: finance and technology. In this way, the so-called Fintech came up from this pair of ideas. But what exactly is FinTech? It is a way of referring to the use of technology in finance.
For many, FinTech is an innovation in the financial world. The use of technology allows obtaining new business models, processes, products and applications that generate good profitability, since FinTech services are precise, fast and efficient.
But it is not only a method to streamline your organization’s finances; it is also a business model, which is why some organizations are dedicated exclusively to FinTech. These are businesses that incorporate the use of technology to such an extent that they become an innovation in the financial industry. These businesses may be dedicated to the sale of products or services. In the latter case, they are characterized by focusing on finance, either to individual customers or advising companies.
Objectives of FinTech
It is clear that FinTechs aim to improve the performance of any organization at the financial level, thanks to the use of advanced technology, which allows both reliable and efficient management. As a clear example of this, we can appreciate the mobile apps of banks, which facilitate the management of people’s accounts. Therefore, it can be said that many banking institutions make use of FinTech services to offer better customer service.
Similarly, a FinTech can also focus on financial advice to individuals and companies, where it also provides budget management tools, expense control and financial planning. This is aimed at enabling people to involve the use of technology in their finances in a productive way. Now, to be a little more specific, according to KPMG International Global Fintech Survey, the objectives of FinTech can be summarized as follows:
- 75% Improve customer experience.
- 48% Transform current capabilities.
- 27% Efficiently reduce costs.
- 22% Protect the core business from threats. But what is the core business? It refers to the main activities of an organization, which allow you to have a competitive advantage.
- 24% Expand into new lines of business, such as offering new services, which must be related to your company. These services were probably not thought of at the beginning of your organization.
- 4% Develop new investments in AI (Artificial Intelligence) based strategies.
Of course, we are in the best moment of FinTech, where there are new improvements to be implemented and it is estimated that this market will continue to be updated progressively. But in particular, many companies have prioritized customer service, since in these cases technological innovation has a lot to offer and is expected to be further developed in the immediate future.
Influence of FinTech on the financial industry
It can be seen that FinTech has resulted in an increase in the front-office and a reduction in the back-office. But is this a good thing? First of all, let’s look at both concepts.
The front-office refers to the contact between the customer and the company, in which the customer is the main focus of attention. So, in a nutshell, the front-office can be defined as customer service.
On the other hand, the back-office is the administrative functions that are carried out in every company. Every business has a backstage, where all financial, accounting and legal matters are carried out. In short, the back-office is everything that customers do not see with the naked eye, but necessary for the business management.
Undoubtedly, technology has a lot to offer in any field, and particularly when it comes to customer service. Its efficiency is spectacular, but many companies are making the mistake of only giving importance to it. Although customer service can boost sales in the short term, the back-office provides stability that can be appreciated in the long term. Like everything in life, for something to be good on the outside, it must first be good on the inside. And, in these cases, the best way to avoid stagnation is to maintain a balance between both concepts when putting them into practice.
