The FinTech Revolution is bringing in billions in investment capital into the commercial financial series space, with faster access to capital, faster payment processing technologies, risk transfer services, along with integrated technologies that combine multiple areas of a business into one centralized managed function. We are truly living in the new wave of innovation that going forward will change the way we all live, bank, collaborate, and operate our enterprises forever. This new wave is fundamentally changing the financial services industry, especially in the United States, helping to both sustain and grow the nearly $2 trillion dollar sector.
What Is FinTech?
FinTech (financial technology) is a business practice of computer science, information system, and other types of technological innovation that aims to disrupt the traditional delivery of financial services on both the personal side and commercial side. The practices are mainly driven through startups, as they zone in on different types of technology innovations that provide a different, more efficient way of delivering various forms of financial services to the marketplace, in comparison to the often less efficient results that traditional methods have delivered.
Commercial Side Innovation
While there’s certainly a FinTech revolution taking place on the personal financial services sector, the advances in the commercial financial services world are particularly intriguing. This FinTech revolution is creating more efficiency on our side through innovations in the way businesses manage their insurance, business banking, business credit scores, payment management, and many other factors.
Certain developments have raised awareness of not only the existence of business credit scores, but also how small business owners can build a stronger business credit profile and access superior financing options. You can see your business credit score and find financing options at Nav.
Payment Management Innovation
Credit, debit, checks, and cash are still by far the most widely used payment options today and will likely continue for quite some time. As a result, a lot of FinTech investment goes into managing these payment options electronically, continuing to speed up acceptance, handling, efficiency, along with total payment integration going forward. Here are some of the significant advances we’ve seen in this sector.
- Various Point Of Sale Systems: POS Systems and other industry-specific Operational Management Systems, allow an organization to consolidate all (or most) of their operating areas into one centralized location. It helps for better inventory management, CRM, marketing insights, back-office management, reporting efficiency, financial management, along with payment option management through credit, debit, check, and even cash processing on certain units. POS Systems are available in stand-alone hardware, mobile software, or virtual technology, with some units giving you the option of having all three capabilities.
- Automated Cash Management Technologies: These technologies automate cash handling by eliminating the tedious tasks of manually handling cash. These technologies include Smart-Safes, which automatically count, verify, and record the cash amounts, provide online reporting, then deposit the amounts to your bank account the next business day. In addition, there are Note/Coin Recyclers and Dispensers, which automate back-office cash handling activities and dispense notes and coins for operational use. Tied to these technologies are services from an Armored Carrier, who guarantees contents within the technology, handles maintenance requests, and brings change fund orders throughout the week, fully automating cash handling.
- Various Retail Finance Companies: These programs are used at the point of sale to allow your customers six to 24 months to pay for purchases, with a consumer finance company providing the loan approval within seconds after a quick application is completed. These programs allow you to outsource any internal financing you might be holding the risk on in-house and also giving your customers the convenience of paying over time, even if they don’t have established credit lines or high credit scores.
- Cryptocurrency Processing: These programs are available to allow you to accept cryptocurrency payments from customers, including (but not limited to) Bitcoin, Ethereum, Litecoin, and more.
Debt Financing Innovation
Small businesses have historically had a difficult time obtaining capital.
From massive paperwork requirements, the requirement of very high credit scores, very high debt to income ratios, along with a “tight box” financial analysis criteria, many small businesses historically had been shut out of the major credit markets to grow, develop, and sustain their business.
Insert FinTech and the rise of marketplace/online lenders and merchant cash advance companies. Using your estimated gross sales volume, credit card receivables, accounts receivables, or other valuable assets, you are now able to obtain the financing that you need within days (or even hours). Amounts from $50,000 to $500,000 are at your fingertips now from the comfort of your computer, due to FinTech innovations.
Other Innovations
FinTech investment is spreading throughout other areas of commercial financial services, including within the insurance sector, banking sector, and commercial mortgage sectors, with technologies and big data capabilities adding various levels of efficiency. There are also investments within compliance, helping companies better respond and manage their regulatory requirements. Reports are showing that FinTech over the last couple of months have hit record investment levels, which means that further disruption to financial services as we know it will continue in the years that follow.
This article was originally written on October 24, 2018 and updated on January 31, 2021.
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