Fintech has become one of the most influential forms of technology in everyday life. From accessibility to democratization and more, the groundbreaking application of computerization and automation are empowering individuals not just on a corporate level but a personal one.
From mobile banking to peer-to-peer lending to microfinance, let’s look at five of the biggest ways fintech is leveling the playing field and helping people improve their financial well-being.
1. Expanding Access to Banking Services
The simplest (and in many ways most impactful) way fintech is shaking up finance is through accessibility. From mobile banking portals to digital wallets, technology is making it easier for consumers of all stripes to monitor, move, and otherwise manage their financial assets.q as
Clay Bethune, founder and CEO of Fintech Finance Group, points out that this accessibility doesn’t just empower individuals. It has larger socio-economic effects, too. “Along with helping consumers access and manage money already,” Bethune explains, “[financial accessibility] has incredible potential to continue helping unbanked or underbanked populations improve their economic status.”
The ability of previously marginalized demographics to simply access financial services cannot be understated. It is an unprecedented hallmark advantage of financial technology.
2. Democratizing Lending
Lending used to be the domain of banks and venture capitalists. Now, fintech is allowing smaller stakeholders to get in on the action.
Things like peer-to-peer lending and crowdfunding have power. They enable those seeking funds to access large pools of capital without going through traditional channels.
At the same time, it enables those with smaller assets available to lend to combine their value. This offers more incentivizing sums to those seeking serious cash infusions.
3. Empowering Small Businesses and Entrepreneurs
More than 5 million businesses were started in 2023 alone. An even more eye-catching statistic is the fact that 84% of businesses in 2020 were run by a solopreneur (up from 76% in 1997). While there are a lot of businesses, many of them are one-person operations.
In the past, the financial element of a business was often a deal-breaker for an entrepreneur. They could offer goods and services, customer service, communication, and all of the other business bells and whistles, but balancing books was a critical area where many fell short.
Now, thanks to fintech tools like QuickBooks, Bill.com, and Gusto, business-minded folks with ambition can easily manage (and at times even automate) complex microfinance tasks like invoicing, payment processing, and taxes.
4. Improving Financial Literacy
Financial education isn’t inherent. It’s a learned behavior—and a critical one for a life well lived, too. Robert F. Smith philanthropy explains, “This type of education could help students learn core finance elements, such as budgeting, planning for retirement, managing debt and tracking spending,” adding, “Without this knowledge, people are unable to make solid decisions about their finances, which can mean the difference between financial stability or poverty.”
Financial literacy is both required and takes time to learn, and fintech is playing a major role in helping with that process. The internet alone has provided a host of high-quality resources where individuals can research and learn about finances.
Individual companies also offer this data. Coinbase, for instance, has an entire area of its app dedicated to learning about cryptocurrency (and even rewards users with small quantities of crypto for correct answers).
5. Enhancing Investment Opportunities
Along with accessibility, fintech is increasing the quantity of finance-related activities available. Nowhere is this more obvious than in the world of investing. From dividend stocks to REITs to cryptocurrency and much more, there are countless ways to invest in 2024.
Often, technology doesn’t just make these investing vehicles available. It also uses things like artificial intelligence and blockchain to make them easier to use. Robo-advisors, for example, make managing a portfolio infinitely easier.
Fractional investing, such as purchasing a part of a building or Bitcoin
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Leveling the Financial Playing Field
Technology is rewriting life as we know it, and personal finance is one area that has been completely transformed by this revolution. From accessibility and opportunity to democratization, education, and entrepreneurship, there is no area of the financial world that is untouched by the power of technology.
This ability to incorporate smaller investors and access underprivileged individuals will only improve over time, too, creating more ways for everyone to thrive as technology continues to bring the world together.
