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What is Fintech and How Does it Benefit Businesses Everywhere?

Estimated Read Time: 7 Minutes

JESSICA LAMBERT , 11 May, 2023

Even though you may not realise it, FinTech (Financial Technology) is all around us and prevalent in our everyday lives/ That includes whenever we buy something online using a ‘buy now, pay later’ service, paying with our phones instead of using physical cash or even ordering an Uber.

Whilst it might sound a bit overwhelming, it’s actually pretty simple! FinTech is a blanket term for the integration of technology and software aimed at improving the delivery of financial services.

The scope of these services is extremely broad and varies greatly. FinTech can include anything from a simple mobile app to complicated blockchain networks and crypto currency.

FinTech is rapidly changing the way we invest, borrow and save money by making it easier for the consumer to make digital financial transactions without the need for traditional banking.

A Brief History of FinTech

FinTech originally referred to the use of computer technology, applied to the back-office support functions of banks, trading firms and other businesses alike. When credit cards first emerged back in the 1950’s, ,  they were likely the first FinTech product ever made readily available to everyday consumers.  They made the need to carry physical currency obsolete and this evolution continued with the production of ATM’s in the sixties.. For the first time, people were able to access their money without needing to go into a branch and interact with another human being.

In 1998 PayPal was founded, representing one of the first FinTech companies to operate primarily on the internet. Since then, the FinTech revolution has led to the creation of the many money transfer and payment services we use today.

How Does FinTech Work?

FinTech primarily works by unbundling umbrella offerings by firms and creating new markets for them as individual offerings. These offerings allow companies to be more efficient and cut down on costs associated with each transaction, whilst providing a higher quality and more enjoyable user experience.

It can also apply to companies and businesses utilising artificial intelligence (AI), machine learning (ML), Robotic Automation Processing (RBP) and encrypted blockchain technology, in order to take the guesswork out of financial decisions and facilitate highly secure transactions through an internal network.

On the whole, FinTech aims to eliminate unnecessary steps for all parties involved, creating a streamlined and speedy transaction process. At Nucleus, our advanced technology means you could get the finance you need in as little as 24 hours!

What is a FinTech Company?

The term “FinTech company” describes any business that uses technology to enhance, automate or modify financial services for consumers or businesses. A FinTech is both a tech and a finance company simultaneously.

Most companies will usually contain a team of developers and engineers on one side and have market experts, financial analysts (and the like) on the other. Some examples of FinTech companies that you may have heard of include:

  • Klarna – A Swedishfintech company that provides online financial services, such as payments, for online storefronts and direct payments, as well as post-purchase payments (buy now, pay later).
  • PayPal – Having been around for longer than two decades, PayPal is now a well-established name in the global fintech industry.
  • Tractable – Using customer images, AI products started enabling fast, accurate damage appraisals to help make recovery from accidents up to ten times faster.
  • Nucleus Commercial Finance – A commercial loan provider, supporting growing companies with the finance they need to flourish. Our range of products has been designed to package solutions that fit the bespoke needs of each individual business that we work with.

 Five Ways FinTech Can Benefit SMEs

  • Time Optimisation – Most, if not all, transactions are carried out online meaning that it is usually unnecessary to go into a physical branch (of course, this will be dependent on circumstance and vary on a case-to-case basis). Whether you are the consumer or provider, financial transactions are made far quicker thanks to high grade technology – for example, when applying for a loan with us, you could have an answer within minutes and the funds in a matter of hours.to funds
  • Easier International Payments – Advancements in banking have brought innovation to sending and receiving payments internationally. This, in turn, has given importers and exporters a crucial advantage. It is now possible to link several currencies into one account, making it far simpler to make and/or receive payments internationally without the need for separate bank accounts.
  • Greater Accessibility – Due to the online nature of Fintech, it means anyone with internet access is able to open an account and apply for a loan. This is great for businesses that may have previously been excluded or prevented from getting finance, as they can now gain access to funds. We, at Nucleus, are champions of SMEs and want to do all we can to help businesses where possible with their funding journey, so we have made our application process super simple and user friendly.
  • Variety of Services – Based on the needs of both consumers and businesses, Fintech has been able to segment services  to provide a more specific and varied range of services. This could allow you, as a company, to offer more services than you previously thought possible. Also, as a consumer it means there are so many more options available to you, especially when it comes to services such as taking out a commercial loan. Take a look at the many products we have on offer at Nucleus that, traditionally, may have come under that same category.
  • Processing Payments More Easily – Payment processing is probably one of the easiest ways for your business to begin using Fintech. These days, there are an abundance of Fintech apps providing cheaper access to card readers which can accept payments via a portable reader that is linked to a mobile phone. As a result, you can easily accept payment at the point of sale which can have obvious benefits to your cashflow and reduce the cost of accepting payments.

Your company has choices when it comes to choosing financial services and these choices could make a huge impact on your business. It is no longer as cut and dry as simply choosing which bank to go with. You now have the choice between opting for what banks offer (which, more often than not, are the same services at the same prices) or exploring what a FinTech lender has to offer, which could end up being better rates and longer term, flexible financial help for your company.

Why FinTech Is The Future

Fintech has found its place in the innovation economy and is becoming increasingly hard to ignore. The more businesses and consumers rely on FinTech services, the more the industry will grow. The growth of FinTech so far and, as a result, the associated competition, has forced companies to consider how they operate.

This includes things such as how fast they respond to funding requests and the changing needs to how their organisations are designed. Previous business models were designed around manual processing, however,  thanks to modern technology, companies are now driven by real time data and the speed of access to products and services sits firmly at the top of the priority list.

Due to the increased reliance on technology over the years, it is likely consumers will gravitate towards FinTech services for their financial needs. EY’s FinTech Adoption Index found that 56% of SMEs use a banking and payments FinTech service and 46% use a financing FinTech service.

The index also found a whopping 93% of SME adopters prefer to find a technological solution where possible, with 89% of SME adopters  willing to share data with FinTech companies. According to research conducted by Innovate Finance, investments in UK FinTech companies more than tripled to $11.6 billion last year, meaning that British FinTech is up more than 217% – coming in  second only to the US.

It is more than likely that in the future, we will see a rise in embedded finance products such as Facebook Pay and Apple Card (which have already taken leaps towards change) – as other companies attempt to compete. The ease with which we are now able to pay for things is incomparable.

The unprecedented rate in which FinTech is growing, paired with the social demand for speedy solutions and quick answers to our problems, means companies have no choice but to adapt. FinTech has quickly branched from being something solely used by finance moguls to becoming a ‘Jack of all Trades’ industry that has something for everyone.

In short, FinTech is developing value-added solutions that are making life easier for both consumers and businesses. FinTech promotes and provides competition, challenge and ultimately motivates the financial industry to be more customer centric by improving the customer experience and not being afraid to try new things. The pace and deftness with which many FinTech’s move has inspired traditional financial services to structure themselves in order to support a more responsive model too. It’s a win win for everyone, which is why Fintech is here to stay.





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