Revolutionary Impact Of American Fintech Companies

The US finance industry is the second largest banking industry in the world and has a total assets of around $30 trillion. However, today, the US finance sector is experiencing a major change, all thanks to fintech companies that have revolutionized the field. Fintech, as the name suggests, is an amalgamation of tech and finance. In this blog, we will examine ways fintech companies are revolutionizing the US finance and banking sector and what it means for consumers and businesses nationwide. 

Rise of Fintech Companies

The seeds of Fintech were sown in the early days of the internet with online banking platforms like X.com, founded by Elon Musk, Harris Fricker, and 2 other founders and later acquired by eBay under the name of Paypal. Even since the launch of PayPal, how people send and receive money changed forever. However, the discrepancies in technology worldwide and even within the US, stopped companies like PayPal from becoming the next-gen banking solution. However, in the late 2000s and early 2010s, mobile apps and the internet became readily available, and almost everybody was using a smartphone that supported mobile applications, which changed the game forever. As per a report by PwC, almost 80% of Americans use some type of banking app on their mobile devices, which is a testament to the convenience of the services provided by fintech companies and apps. Now that we have a little background of fintech businesses and apps let’s have a look at how fintech is helping consumers, businesses, and banking services. 

Impact Of Fintech Companies On Consumers

Fintech companies offer various services that help their customers. Some of them are as follows:

#1 Enhanced convenience

As fintech companies offer their services 24/7 through their apps, the banking and finance experience of the users is enhanced significantly. Users can seamlessly access their account information, make bill payments, transfer money, and do many other things with the help of a mobile device and an app. 

#2 Financial Inclusion

Many SMEs and regional businesses are not able to get loans from big, established banks, leaving them excluded from the whole ecosystem. However, P2P lending platforms offer various personal loan options to small business owners, promoting financial inclusion. This is very important because small business owners are the backbone of a financial ecosystem. 

#3 Increasing Competition (Lowered Fees)

As more fintech companies develop their apps, the competition within them is getting steeper as the days pass. This competition results in lowered service fees. For example, a fintech company, Robo-advisors, offers its financial services at a fraction of the cost of prominent wealth advisors. 

#4 Financial Literacy

Today, many people know what a SIP(Systematic Investment Plan) is. However, this was not the case a few years ago. Fintech companies have played a big role in increasing the financial literacy of the masses. Pretty much every fintech app comes with tutorials for the different services it provides. 

Read Also: Impact of Fintech On Wealth Management: The Fintech Disruption

Impact Of Fintech Companies On Businesses

Fintech companies have not only benefitted consumers, but they have also opened new opportunities for businesses. 

#1 Streamlined Operations

Fintech solutions from fintech companies have enabled the automation of back-office jobs like collecting payments. Now, business owners are able to receive and send payments through the Internet, which makes the whole process easy and streamlined. This also saves business owners a lot of money and time and also helps them reconcile with their customers. 

#2 Enhanced Customer Interaction

With fintech apps, Business owners are able to provide personalized financial products and services to their customers, which helps them garner positive customer feedback. They also offer flexible payment options, fostering stronger relations. 

#3 Fund Raising

One of the most important things for small, emerging businesses is fundraising. Many fintech companies are also starting to conduct fundraising rounds on their platforms. These fundraising rounds might be crowdfunding rounds or peer-to-peer investments. This creates fresh opportunities for small businesses and startups. 

Challenges With Fintech

Nothing is perfect, and everything has flaws. Fintech is no different. Despite its appealing and useful applications, the fintech ecosystem is facing some challenges. Let’s have a look.

#1 Data Security 

Safeguarding the sensitive financial data of consumers, businesses, and other users has been the biggest challenge. Fintech companies have to use robust cybersecurity protocols to ensure that people’s data is secured. With the advent of AI and quantum computing, this task is becoming increasingly more complex. 

#2 Digital Divide

As we mentioned above, one of the biggest benefits of fintech companies is that they host an inclusive environment. However, this inclusive environment can only include people who have mobile phones, laptops, or PCs, which many people still don’t have. 

Revolutionizing The Whole World!!

Fintech companies are changing America’s finance and banking industry, and their impact is reshaping how the world manages its money. Together, fintech startups, fintech companies, and established financial institutions can create a more inclusive, safe, and secure environment for consumers and businesses.

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