Financial technology, commonly referred to as Fintech, is the authorizing of consumers to take charge of their financial commitment on their own terms, decreasing financial illiteracy and enhancing transparency and accountability. Common forms of Fintech include cryptocurrencies, digital wallets, and money transfers through mobile applications.
The economy is in a constant mode of change; thus, new and flexible methods of improving the financial aspects of the economy are being developed to ease financial burdens on individuals across the globe.
Below are practical aspects of Fintech's impact on the economy; the methods can be positive or negative.
1. The creation and development of competition
Fintech products are associated with the development of technology; thus, most Fintech products are provided by certain financial, leading to healthy competition between the providers and investors. The advantage of this impact is that in a bid to keep up with each other's services, the organizations create labor opportunities that reduce unemployment in the jurisdiction.
2. Adoption of new forms of currencies
There are several digital currencies available today; these currencies include blockchain and Bitcoin. The advancement of digital currencies places a demand, thus creating mechanisms and legislation that allow society members to adopt the new currencies.
3. New regulatory frameworks
The development of Fintech has led to various legislations that promote effective trading and ensure that all parties in the transactions are protected. However, it is crucial to note that the legislation only affects individuals in certain jurisdictions; therefore, different jurisdictions are governed by different legislations.
4. Scarcity in physical locations and contact persons
Some of the Fintech products developed in this generation include financial loan applications. These applications assist individuals in moments of emergencies; however, the transactions are carried out through the application, which is mostly virtual, and thus becomes hectic to follow up if a consumer receives a concern. The contact number acting as the customer care contact usually does not pin out as expected.
5. Consumer privacy and security concerns
Every virtual product that is created comes with its share of difficulties. However, it is advisable to be aware and test for any security concerns that the consumer might encounter during the application's run.
Regarding the consumers' privacy, various legislations have been placed to restrict the transfer of a consumer's personal information unless with the necessary consent.
6. Traditional methods of currencies are still applicable
Even amid the financial technology developments, some jurisdictions still embrace the traditional modes of payment. These methods include paying cash or by way of cheques in other jurisdictions. The other reason may be that most individuals are computer illiterate, thereby hindering the adoption of new forms of Financial Technology. And other jurisdictions are too proud to accept any form of change no matter its outcome.
In the End
Financial technology is a sector that is still under development, even though several parties contribute to it. Regardless of the advantages or the disadvantages and the impact of the Covid- 19 pandemic, financial technology is an advancement that people are welcoming into society, thus creating other adequate forms.