Remember the last time you wrote a cheque? It wasn’t yesterday, was it? Our relationship with money has dramatically changed in the last century. Most of us now use a mobile phone to manage our finances, whether it’s checking our account balance or making purchases. This ingenious and revolutionising combination of finance and technology is called FinTech, and it’s growing at a fast pace. Here’s what you need to know about the industry that’s been disrupting the financial world for the last few years.
What is FinTech?
Short for Financial Technology, FinTech is an industry that uses new technology to improve and automate financial services, including insurance, banking, and investing. It’s often assumed that FinTech is new and recent, but you may be surprised to learn that the FinTech revolution started in 1860, when the pantelegraph was invented and used to verify signatures in banking transactions. During the 20th century, FinTech innovations multiplied and gave us credit cards, ATMs, and online banking. Fast forward to today, and FinTech is still going strong with the creation of crypto currencies, digital mobile-only banks, and robo-investing platforms.
More importantly, by providing services and products that are available 24/7 on any digital device, the FinTech industry has been transforming the financial landscape for the last decade and it has changed our financial lives.
What are the benefits of FinTech?
It makes life easier
Thanks to FinTech services, managing your money has never been easier. Let’s say, you want to open a new bank account. There was a time when you had to go to your local bank branch, talk to a bank manager, and fill in some lengthy forms – and the process could take weeks to get finalised. Nowadays, you can set up a bank account in minutes from the comfort of your home using your mobile phone.
It’s the same with investing! Before the Internet era, people who wanted to dip their toe in the investing world often had to do it through a stockbroker, either in person or by telephone. And every time their stockbroker would sell or buy investments (shares, bonds, property, commodities, cash), they would be notified with a phone call. Needless to say, this was time-consuming. Today, robo-investing services, like Wealthify, let you become an investor with just a few taps. All you have to do is choose how much you’d like to invest, select the risk level that suits you, and answer some questions. The hard work is then done for you by a team of experts, so you can spend more time doing what you love.
It helps cut costs
Another advantage is that technology tends to make financial services affordable. Take robo-investing platforms for example. In addition to employing skilled investment experts, digital investing services use computers to process market data and crunch numbers, which allows them to keep costs to a minimum. For example, at Wealthify we invest in funds, which work like ‘hampers’ filled with different investments, and a small charge is taken directly from the fund provider. As well as keeping costs low by purchasing funds, transaction costs are kept to a minimum and we take an annual management fee which is never more than 0.7% and can be as low as 0.4%. This makes sure we keep the cost for customers as low as possible – visit our fee page for more information.
You’re left in control
Finally, the FinTech industry empowers customers and gives them complete control. Thanks to FinTech services, you can check and manage your finances wherever and whenever you want. With Wealthify, for instance, you can access your investment plan 24/7 and on any digital device. You can also add or withdraw money at any time, without any penalty. In brief, with FinTech services, you’re the one in charge.
Please remember the value of your investments can go down as well as up, and you could get back less than invested.