Technological innovations have been considered the core of the banking system for years. Then FinTech comes in as a new player in the game. FinTech has evolved in significant ways throughout the past century.
The concept of FinTech has no longer limited to start-ups. Nowadays, FinTech has entered the mainstream in all markets. It hosts expert companies that offer a range of financial services.
Like other countries in the world, Bangladesh also has a pioneer of fastest growing FinTech Companies, called Nagad. The users of Nagad reached more than 50 million within just one year. It allows millions of people to access digital financial services easily.
FinTech Emergence and Development
The concept of FinTech has developed in the early 1900s. FinTech combines technology with innovative business models to boost and enable financial services. It’s an industry that has grown beyond its early stages to expressively.
Once what was considered a difficult way to manage transactions now has become the easiest way for consumers. Thanks to the rise of digital platforms. The FinTech Ecosystem is consists of four key participants. They are;
- Financial institution
- Governments and regulatory bodies
The role of these participants is independent and interconnected. So, the growth of FinTech largely depends on promising government regulations, financial institutions supporting FinTech, innovations from entrepreneurs, and customer adoption.
Over the last 18 months, the FinTech adoption among consumers has doubled. As stated by EY Global FinTech Adoption Index, the FinTech adoption has enlarged progressively since 2015. FinTech has entered mainstream markets in most countries.
In the US, the rise in FinTech adoption has varied from 17% to 33%, which is now 46%. The rise in adoption is seen through the greater use of payments and money transfers. Clearly, the transaction is seen as peer-to-peer payments as well as non-bank money transfers.
Moreover, the adoption rate is 87% both in India and China. Then, Russia and South Africa are close behind with an 82% adoption rate. The adoption rate is growing rapidly.
How FinTech Adoption Remain on the Rise?
With every passing day, FinTech is becoming an integral part of the worldwide financial system. It is adjusting and adapting to meet consumer, investor, and regulator needs. The grown of cashless payment denotes how people are more interested in FinTech.
Especially since 2020, people are turning to digital transactions due to the COVID-19 pandemic. FinTech starts recognizing the thoughtful effect of blockchain technology on;
- Providing process efficiency
- Generating new revenue
- Enhancing end-user experience
- Reducing business risk
Through FinTech adoption, many companies have enjoyed remarkable growth. Below are the ways, FinTech remains on the rise throughout the world.
- Reduced Cost
Undoubtedly, global remittance has become a lifeline for many countries. At the same time, it is also true that global remittance services are expensive. It comes with tons of hidden charge.
A lot of factors affect global remittance costs, such as FX spreads, processing fees, banks quoted rates, etc. However, companies that offer FinTech services often do not charge any additional fees.
They offer the options for businesses to send and receive money from their respective accounts. There is no burden of conversion fees, modification fees, and other hidden charges.
Also, FinTech allows the combination of physical and digital payment methods. It allows using multiple bank accounts and cards with a single interface. Thus, FinTech offers easier transaction and lessen the overall cost.
- Multiple Alternatives
The website of FinTech service providers is multilingual for different regions. It aims to give the customer choices depending on their location. However, it leads to a range of alternatives for people who are looking to make global payments.
Businesses that rely on agent networks are adapting technology to make the process more secure and affordable for their consumers.
- World-class Security and Agreement
FinTech can easily differentiate the regional laws and regulations due to their position as disruptors. Thus, it makes sure each transaction goes through is appropriately checked. Possibly that’s the reason FinTech adopters are more willing to use online tools or apps.
- Better Convenience and Excellent Speed
Not to mention that better speed and convenience are two significant advantages of FinTech. Thanks to the technological advancement that causes the processes and transactions much faster.
Some FinTech service provider allows the customer to choose from a range of delivery option. They aim to enhance the speed of transactions much faster. Unlike the traditional banking system, FinTech allows the transaction to be processed anytime.
- Enhanced Transparency
Last of all, FinTech also starts to set the stage for better transparency. FinTech keeps the users in a tight loop whether they send or receive money through any specific medium. Also, there are strict security measures, 24/7 customer service, and real-time updates.
As the industry moves forward, FinTech has come a long way. It has made transactions, processes, and systems a lot easier for businesses and consumers. In the future, there will be fewer amounts of people using traditional financial service companies. The continuous integration of FinTech will lead to more progressed financial service providers and models.