1. Introduction
2. What problems can fintech solve?
3. What are the problems of fintech?
4. Security / Data Leaks
5. Governmental Regulations
6. Lending
7. Blockchain Investment
8. Conclusion

Introduction

Have you ever transferred money, paid your bills, or bought somethings using your phone? If you have, then you are a consumer of a swiftly-developing industry called fintech. Check this page if you need a piece of expert advice in the field of fintech development.

Financial technology, or FinTech for short, is the technology that makes it possible to solve demanded financial tasks with the help of financial services and improve enterprises in finance with the help of technological support. Online paying systems are getting more and more popular all around the globe, making traditional ways of payment seem inconvenient and slow. Fintech is a rapidly developing industry that involves cryptocurrency, new payment methods, and new financial opportunities. Fintech, being a young industry as it is, still has quite a few obstacles to overcome. That said, allow us to introduce you to those problems, so you could understand the very concept of Financial Technology more clearly.

If you, however, want to learn more about the basics of the industry, don’t hesitate to check out this short video.

What problems can fintech solve?

But before we jump into that, we would like to point out the benefits and possibilities of fintech and why it is worth paying attention to. Fintech as an industry is capable of solving multiple tasks and providing the consumer with unique services. The most relevant example of fintech is online payment in its diversity: mobile payment apps, cryptocurrency, and blockchain; crowdfunding, budgeting programs, etc.

As we can see, fintech alone became a foundation for many new branches of finance or, at the very least, made it much easier for the consumers to perform payments.

What are the problems of fintech? 

Security / Data Leaks

It cannot be stressed enough how vital security and privacy are for the whole fintech industry. Companies, being provided with valuable information about the consumer (that is card numbers, income, passwords, etc.), should be particularly careful in handling it and act immediately in case of any leakage. Hackers are getting significantly better at accessing and stealing data, making it much more elaborate for companies to protect themselves from the attacks. Fintech applications with their cloud services are getting more and more centralized, meaning if one malware gets into the system it is likely to spread rapidly among the whole application and user accounts. After experiencing leakage or an attack of some kind, companies are as well struck by fines and lawsuits against them, which makes some businesses suffer bankruptcy. Google, Facebook, and Uber are among the corporations which suffered such attacks in recent years.

Governmental Regulations

Needless to say, your application has to be regulated and complied with governmental demands in terms of security, privacy, business model, and every other feature of your development. The question of regulation among fintech applications is especially trending today, as some corporations possess way too much information about the consumer. However, the law is constantly adapting, focusing on providing new security standards in the industry and protect the users.

Overall, regulating the application may be a troublesome and time-consuming process, so one should always keep it in mind when trying to come up with a competitive and demanded product.

Lending

Fintech is playing a tremendous role in the governance and delivery of public services in some countries. Lending in fintech is much easier and overall much quicker. Still, as fintech is a currently developing industry, lending is yet to be moderated. Several problems usually occur: lack of security, limitations of banks, complicated application forms, etc.

As for banks, problems with payment may appear, as infrastructures of the paying systems might not be perfect. Payment may not be completed, but with the money already being written off. In such instances, if the consumer is not approached with technical support, the customer is likely to believe he’s been tricked by the lenders, which makes the latter lose their reputation on the market.

On the other hand, consumers, being provided with an increasingly easier way of borrowing money, tend to start spending their funds far less wisely and fall into debt. As customers start to consume more products, they are less likely to pay their debts: fintech borrowers only partly consolidate their debts.

Blockchain Investment

Blockchain is slowly taking over multiple industries, fintech included. Blockchain investment is one key feature of fintech that is worth paying attention to. Some say 2021 is destined to see capital investment in blockchain technology, as more financial services apps are built with blockchain technology included and cryptocurrency is getting increasingly more used. Great progress is being made in the areas of tokenization, fund administration, etc.

Blockchain investment benefits not only investors but regular users as well.

First of all, most cryptocurrencies provide autonomy, so the user doesn’t have to deal with banks or government authorities. The latter, to be fair, has its downsides too, but that’s a completely different story.

Secondly, paying with cryptocurrencies makes one avoid banking fees, or at the very least reduce them. Apart from that, international payment fees are likely to be smaller too.

And finally, cryptocurrencies do not imply they should be connected to traditional banking systems, meaning the user is provided with great flexibility and accessibility, as you may use cryptocurrencies with only your phone or PC available.

Conclusion

Fintech already plays a big role in our day-to-day lives, as new payment methods and new applications are being provided to the consumer almost daily, creating new possibilities and opportunities. Fintech, as we know it today, provides many new financial possibilities for the investors and overall business industry, as well as for regular people. Banking and financial systems are slowly becoming more and more digitalized, but without crowding out the traditional ways of payment. That said, we can only hope to see more from fintech and look forward to seeing new technologies making our financial management easier.