FinTechs, an opportunity for the development of the financial sector

With the advent of the internet, we are witnessing many innovations these days. Whether in commercial or service companies, operations can now be carried out on the Internet, mainly thanks to the emergence of the technology sector and mobile phones, which have become real service delivery platforms in Africa.

In the world of banking and finance, we hear more and more often about fintech (also spelled FinTech) which means financial technologies .

In recent years, Fintech has made considerable inroads. FinTech startups are gaining ground even in Africa. Fintech was born out of the internet and mobile revolution and continues to evolve.

There are many applications that have changed the way consumers access their finances from a computer or smartphone connected to the internet. But, as this term is used with different meanings, some confusion results.

So what do we mean when we talk about “fintech” or “a fintech”? How does it work? How to use it ? In this article, we’ll walk you through everything you need to know about fintech.

What is FinTech?

The expression FinTech is a contraction of the terms “finance” and “technology”, it is the abbreviation of English Financial Technology or financial technologies. Financial technology or “fintech” refers to new technologies and their use in finance to improve and automate financial services and processes.

By extension, the acronym designates the sector of activity in which companies use new information and communication technologies (ICT) in order to offer less costly and more efficient financial services to consumers. This is how we designate all the companies that intervene in particular in the banking and financial sector, with a view to bringing innovation, improving their efficiency or providing new services.

Fintech describes any business using internet, mobile devices, software technology to provide financial services. Many fintech products are designed to connect consumer finances to technology for ease of use.

Fintech companies concern the world of banking, insurance or financial services. We develop trading services, online payment systems, loans, data-based decision-making, investment services, customer service through chatbots , companies specializing in crowdfunding or crowdfunding. of a project, personalized services based on artificial intelligence learning customer habits. Most often, Fintech startups offer their services online, which allows their customers to enjoy their services from all over the world.Their goal is to offer new transaction models, to simplify and secure transactions on the Internet.

What is fintech?

Fintech is essentially used to help businesses and consumers better manage their day-to-day financial operations using software and algorithms on computers and smartphones.

Basically, the goal of a Fintech creator is to offer the general public simpler, more efficient, more accessible and lower-cost technological and financial services.

Startups that offer new financial products are more nimble and reach out to underserved segments by offering faster and cheaper services. More importantly, FinTech provides a range of affordable and convenient financial services to people with little or no banking.

What are the uses of Fintech financial technologies?

Many services have developed for different uses. Focus on innovations and the impact of Fintech on the business segments  that make up the financial services market.

  • Electronic payments to merchants via Smartphone and on the internet or on e-commerce platforms. The emergence of Fintech and non-financial players offer direct, fast and inexpensive means of payment. The area of ​​payments is the easiest to perceive by the general public. In fact, it brings together all payment solutions including mobile, transfers, electronic billing, digital currencies such as Bitcoin.
  • Insurance:  thanks to their technological mastery, insurers must ensure that they constantly meet these new requirements. Innovative insurance companies can be likened to Fintechs. The digitalization of the insurance world seems to be a necessary step. Today we are witnessing the emergence of start-ups that combine insurance and technology.
  • Deposits and loans, digital banks: the transformation of models is rooted in the financial services market. Banks will remain the market leader. There are mobile applications and platforms that allow you to manage your banking activities.
  • Fundraising:  the emergence of crowdfunding and online platforms offer new and multiple sources of financing to customer segments that are still under-exploited. This part also covers concepts such as  crowd lending  , SME financing and micro-loans. Clearly, what is said to be “participatory”. Crowdfunding consists of a group of people pooling funds via the internet. Crowdfunding platforms allow project leaders to benefit from the support of business angels. Instead of approaching a traditional bank for a loan, it is now possible to approach investors directly.
  • Investment Management: This area addresses the needs of investors of all types. It is divided into two main areas: decision support solutions ( robo-advisors ) and support for trading activities by allowing individual investors and small businesses to make complex investments that are more suited to their needs. market expansion.

Here are some of the core fintech technologies

  • Internet
  • The Cloud  : The centralization and storage of data by specialized services improves security and the capacity to process data, but also reduces costs.
  • The Smartphone which allows, among other things, mobile payment services.
  • RFID and NFC  : Radio frequency identification (RFID) and its application to short distances (NFC) are essential for remote payments by credit card, or with an electronic wallet application stored on a Smartphone.
  • Blockchain  : It radically solves the problem of data integrity. Cryptography is used to link blocks of data together in such a way that the tiniest modification invalidates the chain.
  • Machine learning or automatic learning Indispensable for the processing of large masses of data, this area of ​​research and application consists of training a computer program to perform tasks.
  • “Big Data ”: This refers to the storage and analysis of a wide variety and mass of data which, for example, allows banks and insurance companies to get to know their customers much better, to make predictions, to detect fraud and prevent risks. The exploitation of this mass of information is based on cloud computing and the “  machine learning  ” already mentioned.

To conclude, the FinTech industry is an expanding industry that will continue to grow faster and faster as artificial intelligence and blockchain technology advances.

Mediator Nkurunziza