10 Reasons Business Owners Need to Know About Fintech
Fintech is the marriage of finance and technology, and regardless of your industry, you may want to follow what’s happening in the world of fintech. This sector of the finance market has exploded in recent years and, in particular, it has generated a number of products and services that are ideal for small business owners.
Here’s a look at just ten of the top reasons you may want to keep your eye on what’s happening with fintech:
1. Business Lending
Perhaps the most exciting area of fintech for business owners is lending. . Their processes takes into account multiple data points about the business owner in comparison to traditional criteria. This speeds up the funding process and makes it available to more small business owners.
2. Personal Lending
For cases where you need money for personal endeavors, fintech can help as well. Fintech companies focused on personal lending use a variety of different platforms. For example, with peer-to-peer lending borrowers solicit loans from peers interested in earning money by lending it. Again, this is vastly different from the traditional process of taking out a credit card or a signature loan.
While crowdfunding can be a great way to raise money for an emergency personal expense, the practice goes well beyond that scope. There are crowdfunding sites designed to get your business off the ground, and these fundraisers rely on donations. However, there are also services such as Crowdfunder, which focus on equity crowdfunding. Essentially, you sell equity or stocks in your company with this type of platform. Then, you use the money generated to start your business. These contributors have a small piece of equity in your company that will pay them dividends in the future. This process is making equity financing available to a whole new group of businesses.
4. Accounting Tools
Fintech can also be about managing the funds you have. In this vein, apps designed for small business streamline and automate a range of tasks. There are apps to track expenses, create invoices, organize inventory, write employee schedules and much more.
5. Point of Sale Payments
In addition to the tools mentioned above, fintech companies also make simplified, but feature-laden, POS systems. These can run the gamut from mobile POS systems, systems that integrate restaurant ordering, systems that engage with your ecommerce records as well as a long list of other options.
6. Meaningful Data
Business owners have more and more data about their clients and website visitors every single day, but finding ways to make sense of all this data can be hard. Cue fintech. The industry is developing tools to help business owners turn large volumes of data into meaningful information.
7. Automated Investment Advice
Fintech companies are also creating tools designed to dispense automatic investment advice to retail investors. If you want to make investments, these tools are becoming more reliable and less expensive than paying a human advisor. Alternatively, if you are an investment advisor, you may want to figure out ways to integrate these fintech tools into your business.
8. White Label Products
As indicated above, not all fintech tools are simply for business owners to use. In other cases, it makes sense to buy white label fintech software or services, brand them as your own, and offer them to your clients. Many fintech companies are doing a version of this setup by partnering with banks to increase the volume of products they offer. Some fintech companies are also offering label products that small business owners can use. For example, if you own an appliance store and you want to offer credit to your clients, you could use a fintech product to streamline that service.
9. Fraud Protection
Fintech companies are also making payment processing and lending safer. In particular, companies such as Riskified and Centrify offer fraud protection and identity verification. This can ultimately make it safer to process payments. Additionally, it’s critical to keep up on top of these issues for the safety of your clients and the competitiveness of your company.
10. Adoption Rate
Of course, it’s not just about the products on the market, you should also know about fintech because your potential customers may already be using it. As of 2015, 29% of all consumers in Hong Kong had used at least 2 fintech services during that year, and in the United States, the number was 17%. If you want to tap into these markets, it may be time to use your own fintech services.
Those are only ten of the top reasons small business owners should follow fintech. As you follow the industry, you will undoubtedly find the niche that appeals to you as well as some products that can help make business ownership easier for you.