Fintech, short for financial technology, is often referred to as Digital Financial Inclusion (DFI). It pertains to the delivery of conventional financial services using digital platforms, such as mobile banking and online banking.
The primary objective of fintech is to provide real-time, convenient, and high-quality financial services to individuals, ensuring security and fair pricing for their financial needs. The rise of Internet and mobile Internet technologies in the 21st century has created prospects for the overall advancement of inclusive finance. Mobile phone-based provision of financial services has emerged as a burgeoning trend.
Advantages of Fintech
The emergence of fintech garnered significant attention during the Covid-19 outbreak as individuals faced mobility restrictions. Consequently, both developed and developing nations turned to financial technology to access and benefit from financial services. As a result of the epidemic, financial institutions have also enhanced their alternate delivery methods to provide uninterrupted financial services for their consumers. In addition, fintech's ability to streamline financial services, it has certain benefits such as;
- Fintech enables consumers to conveniently access a range of financial services, including bank accounts, investment plans, lending facilities, cash transfers, and bill payment services.
- As a result of the growing client base attracted by fintech, financial institutions are able to both expand their customer numbers and generate substantial profits.
- Financial institutions, upon achieving substantial profits, increase their range of products and services. Consequently, they generate considerable profits and subsequently contribute a substantial amount of taxes, which in turn plays a pivotal role in fostering economic growth.
- With the proliferation of branch-less banking services offered by fintech, financial institutions are also creating job prospects for diverse individuals. These persons serve as representatives of the bank in various locations.
- The advancement of fintech in a nation facilitates consumers to use financial services without physically visit a bank branch. Consequently, this reduces the need for persons to travel, leading to a decrease in energy usage. Efficient transportation leading to environmental sustainability.
Disadvantages of fintech
In addition to its benefits, fintech also has several drawbacks that limit consumers from utilizing financial services through fintech.
· Fintech necessitates a robust internet connection, although individuals in poor nations lack the means to acquire and utilize smartphones to access fintech services.
· Fintech incurs comparatively greater transaction fees than the traditional banking system.
· Fintech encounters certain privacy and confidentiality concerns that limit its utilization.
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