FinTech: What’s This Word I’ve Been Hearing?
FinTech, FinTech, FinTech. It’s been on the cover of newspapers, magazines and websites seemingly more and more as each day passes by. A large portion of business owners we speak to have never heard the term. That being said, they are often aware of the services and major players. FinTech is a relatively new term, or buzzword, and only recently has it made its way to the masses. Evolocity is proud to be a FinTech pioneer in Canada and today, our mission is to introduce you to the wonderful world of Financial Technology.
What is FinTech?
FinTech Weekly defines FinTech as “Financial technology, also known as FinTech, is a line of business based on using software to provide financial services. Financial technology companies are generally startups founded with the purpose of disrupting incumbent financial systems and corporations that rely less on software.” In short, it is the combination of two distinct industries, the financial industry and the technology industry. The financial aspect involves the funding business loans, cash advances, or other types of financing while the technology aspect involves the platform on which the fundings are requested and processed.
Why Has FinTech Become So Popular?
Let’s start by looking at an example from another industry, the Hotel business. AirBnB has exploded with growth for a few simple reasons, it is making things easier and faster. Now shifting back to the financial world, banks are notorious for their long loan application processes and funding lead times. The solution was simple, make getting a loan for a small business easier and faster. Enter FinTech lenders. Through online applications, small business owners can now apply for extra working capital and receive those funds in their accounts in less than 48 hours, all from the comfort of home.
Why Would My Business Choose a FinTech Company?
Before you feel the pressure to make a choice between a bank and a FinTech company, there are a few points to consider. First off, if you already have a line of credit with a bank you will likely be able to get fast and affordable financing that way. FinTech companies are there to fill the void. If the banks don’t accept your business because it’s too small or even if the bank isn’t meeting 100% of your capital needs, then it may be time to consider FinTech. The other reason and one of the most popular is timing. Unexpected expenses happen, such as an air conditioning unit going out in the dead heat of summer or an urgent, last minute renovation. The relative ease of simply jumping online and taking a couple of minutes to fill out an application and having those funds in a couple of days could just be a saving grace.