The world of banking has turned on its head. It used be that the banks and credit unions were the only notable source to borrow funds. Well, this seemingly impossible shift has come and there are now many new “competitors” to the traditional financial service firms.
There’s been a lot of talk about FinTech and perhaps there are questions you weren’t comfortable to ask? I’ll address them here.
FinTech, or Financial Technology, is the term used to describe technical solutions that make financial services more efficient and more personal. A successful example is in the “money loaning” space.
As with any business, entrepreneurs have to start somewhere to get their product into potential customer’s hands. This can be tough since what they need most of is money.
Banks have been the traditional source for loans to start a dream business. The reality, however, is that financial institutions need to mitigate risk and, they have to look at a plan to utilize money and eventually how you they will get repaid.
Consequently, there have been new successful resources to help fund products; with technological advancements and the idea of a product to make a difference in the world, there are consumer-based startup sites where potential customers fund projects. When they fund it, they expect to get an early release or developer rights to help build software they would want to see in that specific product.
Some of these crowd funding sites include Kickstarter, Amazon Lending, Circle Up, and Indiegogo. As of right now, Kickstarter and Indiegogo are the most popular sites.
Some of the drawbacks of these sites are that since a product could be seen by millions of people, a competitor could steal the idea and base another product off it. Additionally, while a product can be funded, normal issues that may delay a launch. may hurt a business image as an entrepreneur is now accountable to their fintech backers.
Currently, fintech has become an important part of entrepreneurs’ business successes that banks have become somewhat a second or third option to get money to build a business. As a result, the major financial institutions and credit unions themselves are attempting to reinvent themselves and continually remain relevant despite technological advances.