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What is a Fintech and why are they booming?

The reach of the Internet allows users around the world to access a given banking platform to manage their finances quickly and easily with just one click.

This has generated the proliferation and diversification of a series of services that meet the needs of the population, as is the case of startups in the financial sector that use new technologies.

But do you know what a Fintech is and why they are booming? Find out in this post.

What is a Fintech and why are they booming
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What is a Fintech?

The term fintech is used to identify all those financial companies that make use of information and communication technology to improve the financial services and offer their products to users.

This also turn to be startups because they are a new organization with ample growth possibilities and related to the technological world. 

In other words, fintechs are nothing more than startups that develop using the tools provided by technology to improve their financial management processes, which allows greater access to them by any user interested in the services they offer. 

Fintechs have applications and business models available through the Internet, so the combination of digitalization and web are a key tool to provide virtual solutions that facilitate traditional processes, so that anyone can manage their money without leaving their home or office.

Businesswoman analyzing market evolution with tablet

Why are new Fintechs being created?

Business team.

Fintechs offer a series of digital services useful for the wealth management of other companies, personal finance management, alternative financing or simply a new electronic payment method, to name a few; which means that it comprises a multitude of operations that are indispensable nowadays, when many users need to keep their financial transactions at a distance.

This has led to the vertiginous rise of new fintech, in fact according to a study conducted by the Observatory of Financial Digitalization Spain has more than 300 startups that are part of the environment, which places the country in sixth place in the world with reference to this sector and continues to grow steadily.

In turn, this new area of the financial industry has the impetus of the European Parliament, has generated employment for thousands of workers and is turning over millions of euros, which has led to the conclusion that the expansion of fintech companies is accompanied by a series of opportunities for different sectors of the world’s population.

In fact, many people are currently using 65% of the services offered by this new form of banking to carry out the usual day-to-day transactions; this has been confirmed by a study through a survey in the sector conducted by EADA Business School and ISDI.

New fintechs are being created because it is a modality of business operation that facilitates the management of transactions quickly and securely from anywhere in the world, which is being demanded by many users and at the same time allowing them to cover different financial sectors that provide them with sufficient income to continue growing.

There are different types of fintech, with functionalities that are revolutionizing banking, such as those listed below:

Why have Fintechs become relevant?

Fintechs are gaining strength in many countries around the world by using digital resources to meet the financial needs of users, in turn serving as catalysts for traditional banking, encouraging them to join this new way of doing business.

Life since a couple of years ago has changed drastically for many people, the presence of the Covid-19 pandemic has forced them to meet a certain social distancing that has impacted the economy and especially in banking.

It is therefore timely to take advantage of the benefits of fintech in the financial sector, among which we can highlight:

In short, fintechs have become relevant for facilitating financial transactions for both individual users and different types of organizations, especially commercial ones. 

They are practically becoming indispensable, since once a customer tries the benefits they offer and the ease of payment they provide anywhere in the world, they no longer wish to change financial entities and this is extremely positive in business; undoubtedly an invaluable support at all times. 

This success achieved by fintechs is due to their purpose of improving financial infrastructures and ecosystems, making them revolve around the customer, which is generating a very promising future for them, since this way of providing solutions and functionalities is what leads to their acceptance by the public, who feel that they are directly related to their banking entities. 

Innovation in financial technology will be increasingly strong, as it grows at the pace of the digital needs of users and this will allow fintechs to continue to evolve in order to position themselves competitively in the world of finance.

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