Technology has been part of our everyday lives for years and we now use it more than ever before. Since lockdown changed working habits all over the world we rely on technology to assist us in our work and personal lives every day. Technology is moving forwards all the time and there are exciting innovations out there which require investment. One area which is seeing particular growth is financial technology; also known as fintech. Read on to find out more about fintech and how to become involved.
What Is Fintech?
Fintech has been growing for a number of years and looks like it won’t be slowing down anytime soon. Some examples of fintech companies are Stripe; an online payment platform, Klarna; which offers users to pay for purchases in instalments, and Revolut; a digital banking platform. Many other fintech companies are operating in the market which aims to transform traditional financial processes. Indeed, most global financial service companies plan to increase their partnerships with fintech companies by almost 90%.
The Use Of Artificial Intelligence
Artificial Intelligence, or AI, has had a significant impact across the globe in recent years. When it comes to fintech AI has a crucial role to play. Algorithms used by AI can detect fraud, perform credit scoring, run chatbots, personalise the user experience and conduct risk assessments. Alongside AI, cloud adoption in financial services is emerging as a pivotal element, offering scalable solutions and fostering innovation through enhanced data management and analytics capabilities. It is no longer about just gathering data. AI learns and can be trained to analyse data, look for trends and even perform trades. The application of AI in the finance industry is evolving all the time, and this is driving more innovation in the sector.
Investing In Fintech
Fintech is big business and as a result, new ideas and progress are happening all the time. This means that start-up businesses in this sector are going to be looking for investment to get their potentially ground-breaking ideas off the starting line. Investing in new and upcoming businesses, especially in such a fast-moving sector, can be an exciting thing to be part of. However, it can be difficult to know which business to invest in. That is why so many people are choosing to invest in technology through Enterprise Investment Schemes (EIS). EIS is a government-backed investment scheme which offers potential tax relief to investors who invest in early-stage British companies. EIS Providers such as Oxford Capital work with investors to introduce potential investment opportunities and provide expertise on the potential benefits and risks associated with this.
How Banks Are Using Fintech
As we saw earlier, the word fintech covers a lot of different applications. Banks all over the world have recognised how fintech can improve their operations. Digital banking is one of the most common ways banks use fintech and as the technology grows more and more products can be made available to consumers through digital banking. Fintech can be used to perform faster, and more secure, payment methods. Some banks are incorporating AI to offer investment advice and portfolio management. By embracing these advanced technologies banks can improve their customer experience. Ten years ago digital banking couldn’t perform anywhere near the same as it does today and who can say what the next fintech innovation will be.
It Has To Be Safe
Exciting new ideas aside, whatever the next development in fintech might be, it won’t go anywhere if security isn’t at the core of what they do. Taking security seriously is crucial for any business that deals in finance. Proper security measures must be in place to protect information, data and money for the Company and their users. When considering investing in a fintech company it is worth making sure you are comfortable with the security measures they have in place. Research and conversations with the founders will be paramount.
Fintech looks like a strong investment opportunity but, as with any investment, there is a certain degree of risk. While fintech might be on the rise and there have been some monumental success stories, there will be many start-up fintech companies that didn’t make the grade. It is worth seeking expert advice to ensure that any investment has the potential to be as successful as it can be.