What is Fintech?
Fintech is defined as computer programs and other technology used to support or enable banking and financial services. Examples of fintech include simple things like mobile banking and e-transfer capabilities, all the way to credit-scoring applications, international payment systems and blockchain networks. In general, these technologies are making all banking simpler and faster.
How is it being used?
Fintech helps enterprises and people navigate increasingly complex banking systems. Such softwares are becoming more mainstream: according to EY’s Fintech Adoption Index, one third of consumers utilize two or more fintech services on a regular basis, and these consumers are increasingly aware of the changes it makes to their daily lives.
Financial technology has essentially accelerated access to services and transactions. Thanks to easy transfers and a larger network, lending has become more accessible for both consumers and businesses, in cases from peer to peer to crowd-sourcing campaigns (a new phenomenon enabled by fintech). Payments have become easier, faster and safer for online purchases as technology improves.
Some softwares have features especially geared toward businesses that work internationally. One useful capability is a service that takes care of currency conversions for you – for example, if a Canadian were buying from an American store online, the service ingests the Canadian cash paid and sends corresponding American cash to the company. Market entry has become easier as it’s no longer a necessity to open a bank account in every country and deal with all of the regulations and paperwork to accept payments.
How will it impact companies that do business internationally?
Accessibility to customers.
By minimizing barriers to entry of markets, and making transactions easier for international customers, businesses can gain more profitable access to an attractive target market that may not otherwise have been reachable.
As the volume of international transactions increases, fees are likely to decrease over time. Additionally, the third party fintech software companies on the rise are able to offer lower fees than larger banks due to their unique business models. For example, bill.com is able to offer cheaper transfers than an international wire transfer, and is available across 25 countries.
The impact is biggest on small and medium enterprises, who didn’t have the infrastructure to do this before. Developments in financial technology are breaking down bureaucratic barriers and making it easier for small businesses to have a global presence.
Check out a few prominent fintech firms that have made tangible changes for international businesses:
Described as “the new standard in online payments”, Stripe focuses on being an easily integrated product for internet businesses. International companies benefit from Stripe’s help with international payment methods and compliance. Stripe is available for revenues across 25 countries. They work with financial institutions and regulators to take care of the dirty work, and put your platform into place.
“Removing the barriers to online commerce helps more new businesses get started, expedites growth for existing companies, and increases economic output and trade globally.” – Stripe
WorldFirst is an SaaS based company that positions itself as an expert in international money transfer, boasting quick transfers and low exchange rates. One of its services, the World Account, cuts the cost and time of opening many international bank accounts for SMEs – usually a perk that only large MNCs would benefit from – allowing them better access to global commerce.
“Nobody has got a universal platform to allow anyone, anywhere to sell to anyone else anywhere yet, but that is what we are working on building.” – WorldFirst
Kreditech provides financial loan solutions to entities without a credit score. This can include micro loans to consumer lenders, as well as lending-as-a-service to e-commerce websites which can increase conversion rates.
“Thanks to our unique scoring technology and digital lending process, formerly underbanked customers receive offers and payouts 24/7.” – Kreditech