Saturday, December 5

Advantages and Disadvantages of Fintech

Financial Technology often shortened to Fintech is the new technology and innovation that aims to compete with traditional financial methods in the delivery of financial services. It can be considered as any innovative idea that Improves financial service processes by proposing technology solutions according to different business situations, while the ideas could also lead to new business models or even new businesses. In simpler words, Fintech describes any company that provides financial services through software or other technology and includes anything from mobile payment apps to cryptocurrency. It is an emerging industry that uses technology to improve activities in finance.

In this article, let’s discuss the pros and cons of Financial Technology

Fintech

Advantages of Fintech

Time Saving

Carrying out the financial transactions and procedures via online means helps to save time as they are much faster. Through automated processes the day to day efficiency of the companies is also increased. Nowadays, it just takes a few minutes or seconds to transfer money in someone’s account unlike the traditional methods of banking where one had to wait for a number of days. Also, in today’s era, the time is precious.

Flexibility

Using technology in the financial sector is very flexible and convenient. The user interface is quite simple. Fintech allows you to perform all kinds of operations from wherever and whenever you want in a very simple way. For example: being able to request a loan from home with just one click and no paperwork at the bank. Sounds good, doesn’t it?

Personalization

With Fintech in the market, every user can get personal attention and make changes according to their will and comfort. Most likely, if a user is able to detect a problem in their financial environment, there will already be a startup designed specifically to offer a customized solution.

Transparency

With the emergence of Fintech companies, there is a clarity among consumers on where their money is going. It ensures that the businesses are carried out transparently without any scams or frauds. The application of new technologies, in addition to speed, has provided new ways to measure and ensure a more transparent business management and financial offer.

Know More: Advantages and Disadvantages of Business Ethics

Fintech

Disadvantages of Fintech

Lack of security

As all the procedures and transactions are carried out through the Internet, there is a threat of cyber crime. Though the companies work day and night in order to provide a secure environment to the consumers, there have been cases of hacking and virtual fraud in the past. This is the biggest disadvantage of financial technology over traditional banks as many still feel that the latter is more secure and reliable.

Lack of knowledge and resources

Although the level of penetration of fintech in the business and financial fabric is growing, there is still a wide sector that does not know what they are, what their benefits are and how to use them. Such people are not very well equipped with the modern ways and can feel left out. Also, though the internet has reached many parts of the world, there are people who are immune to such things. They neither have proper knowledge nor resources.

It Can End the Informal Economy

Though it is good to legalize one’s salary or income and pay taxes to the government, there is a large section of society that refrains from doing so. Recording and digitizing all transactions means giving the state deep insight into everyone’s financial activities. This will surely allow them to maximize taxation. Also, perhaps, in the long run, this will make for a better society as a whole. However it could lead to the impoverishment of the most vulnerable members of society. As they are subjected to a tax burden their markets simply can’t handle.

PROS CONS

Time Saving

Lack of security

Flexibility

Lack of knowledge and resources

Personalization

It Can End the Informal Economy

Transparency