Financial technology — also known as fintech — is defined as a disruptor of financial services, such as loans, funds transfers, asset management, fundraising, and mobile payments. Fintech doesn’t offer new financial services. Instead, it offers entrepreneurs the ability to complete the same financial transactions in a different way, which veers away from the traditional channels. The advantages of fintech are that it offers cheaper and easier options in general. Here are some of the ways fintech has shaped the ways entrepreneurs do business.
Instead of entrepreneurs having to go through the grueling and nerve-racking process of talking to investors over the course of months, they can opt to go the route of crowdfunding. Some of the more popular crowdfunding platforms include Indiegogo, RocketHub, Kickstarter, and Patreon. Different types of crowdfunding exist, such as donation-based, debt, and equity.
Crowdfunding allows entrepreneurs with awesome ideas to obtain funding from investors all over the world by inspiring them to contribute. The best part? Desired funding can happen in mere weeks instead of months. Plus, crowdfunding platforms handle bookkeeping, payment processing, legal disclaimers and the like.
Another advantage of crowdfunding is that it can create a buzz about an entrepreneur’s startup or product, which can attract future investors.
2. International Funds Transfers
With the rise of fintech, international funds transfers for entrepreneurs have become far cheaper than what they were previously. Money transfer services, such as TransferWise have helped spur the cheaper prices, incentivizing entrepreneurs to look beyond the traditional bank wire for their needs.
3. Cheaper Payment Processing
Prior to the rise of fintech, processing credit card payments were quite costly. But now, entrepreneurs can process payments through a secure and simple interface using a mobile phone or tablet. A wide variety of mobile payment platforms are available depending on each entrepreneur’s business needs, including PayPal Here, Flint, Stripe, Square, Shopify POS, PaySimple, QuickBooks GoPayment, and ProPlan.
Fees for payment processing platforms vary, so it pays off to shop around before committing. For entrepreneurs just starting out, plans that cater to small customer volumes might be more appropriate than investing in a larger plan that charges monthly fees no matter how much you utilize it. Sometimes payment processing providers offer a variety of plans, and you can change plans as your business grows.
4. Improved Customer Service
Customer service is a vital part of any entrepreneur’s business. More often than not, entrepreneurs operate websites in connection with their business. But it’s hard to be available to answer questions 24/7.
One way that fintech has found to improve customer service is by using AI — also known as artificial intelligence. AI options give entrepreneurs the ability to interact with their customers in real-time. AI bots can engage customers who visit the entrepreneur’s website, answer questions and deliver helpful information in an efficient and satisfying manner.
Being able to provide a solution that can give the customer the answer they are looking for or at the very least, give the customer a sense that you care about their business can greatly improve customer service.
5. Tracking Expenses and Sending Invoices
Other critical pieces of the entrepreneurial puzzle are monitoring expenses and getting paid. Rather than hire an accountant who charges by the hour, a variety of expense-tracking, payment, payroll, and invoicing applications and software are readily available — many of which are at very affordable price points.
These types of applications can be very user-friendly. Even entrepreneurs who don’t have IT skills or accounting experience can find an application that’s easy to understand and use. Not only that receipts and other documents can be captured with the click of a mobile device and imported into the app.
How Fintech Makes a Difference for Entrepreneurs
To sum up, fintech has impacted the way entrepreneurs do business in a variety of areas, especially when it comes to accessibility, ease, and efficiency. Services that may have been out-of-reach for small business owners in the past are now readily accessible. Tasks that may have seemed only fit for a professional are now made possible with user-friendly applications.
Fintech can help entrepreneurs save money. For example, there’s no need to buy expensive financial software and pay for program licenses — or pay for an accountant’s exorbitant fees with available products like cloud-based financial tracking, payment, and invoicing applications. Expensive credit card processing machines that cost up to $400 are also not a necessity when entrepreneurs can use their mobile phone or tablet to process payments. Overall, fintech is a financial services sector that makes entrepreneurs’ lives easier.