Fintech

OBJECTIVES

Fintech developments help start-ups and companies in optimizing classical operational processes with the help of innovative IT and communications technology. Users generally benefit from a user friendly and intuitive operation as well as profitability. Furthermore, users benefit from alternativeto traditional financial services such as a credit from a bank or capital investments.

The developments of individualized digital services such as designated computer software, online platforms and Apps will offer transparency as well as structured processes. In the past it became clear that users prefer transparent processes. Due to the users’ preference of transparent processes, digital developments have the potential to prevail against traditional operational processes.

Both developers and users of Fintech companies will benefit in economic terms as well. While traditional operational processes within the financial services market demand costs of maintenance on a regular basis, the digitalization and automation of processes can increase the economic efficiency significantly.

For instance, a clerk will check the credit rating of a potential debtor according to specific criteria in a credit catalogue. This process can be faster and more cost-efficient with the help of financial technology. An automated process can save both the customer and the creditor time and money. With decreased costs users will be able to benefit from better offers due to lowered incidentals for example.

RELATED INDUSTRIES

The increasing digitization and the shift from traditional processes due to technical innovations can be witnessed in different business sectors.

Property technology or Proptech stands for innovative and digitalized services within the real estate industry. These include services for real estate agents, prospective tenants and the real estate management. Furthermore, Proptech also includes developments in the management of apartment buildings and the investment in real estate by using online platforms. In some cases it is not as easy to distinguish one technology from others.

Crowdinvesting for real estate for example entails investments in real estate by a group of people. Crowdinvesting is part of Proptech and Fintech as both industries are connected to one another.

The insurance sector is another industry that is closely related to Financial Technologies. It has also been further developed with the help of IT and communications technology. Insurtech for instance stands for Insurance Technology. Providers strive to optimize processes to offer additional benefits to their customers. In Germany there are Apps for instance that will arrange, catalogue and present all personal insurance policies visibly.

Apart from these developments there are additional areas of application for modern technology. Their common ground lies in creating synergies for users by improving traditional processes with the implementation of modern information and communications technology.

AREAS OF APPLICATION

Fintech has already established itself in several areas. Some of the companies include payment services for online shops that ensure safe and fast payment processes. Payment services for mobile devices have also attracted some attention. According to the developers, they will enable automatic payments from the customer’s account and potentially replace the traditional wallet.

Fintech developments can also be witnessed in bank credits. Smaller credits, also known as micro credits, and credits to debtors with a less than ideal credit rating have been successfully established with the help of online platforms. The providers of these online platforms are not operating as a bank. Instead they arrange anonymous private loans and help the alteration on the financial and capital market. Fintech also includes innovative financial services within the capital investment industry. They include investments in properties and real estate. Additional Fintech services include pension plan services. These areas of application only show a fraction of the current developments, as new areas are being created continuously.

POTENTIALS AND PROSPECTS

There are several companies that have established themselves in Fintech. They include online platforms that will offer comparisons between capital investment options or insurance policies and offer innovative investment options. There is a steady increase in the number of users and the revenue from these platforms. Similar developments are expected in related industries.