Contact us today!

FRS Pros Blog

What You Need to Know About the Growing FinTech Market

What You Need to Know About the Growing FinTech Market

Money needs to move in order for the economy to work. Traditionally, banks are the major lending institutions, and as a result have to adhere to a myriad of regulations. To provide an equitable system that people aren’t afraid to utilize, there are a lot of checks and balances that have put in place by the bank and regulators, alike. Today, there is growth of what are called marketplace lenders (MPLs) that are changing the way people (and organizations) can access capital and it is fueled by what is referred to as FinTech, or financial technology. Today, we will take a short look at FinTech and how it is changing the way we manage, borrow, pay, see, and use money.

While the banking institutions have to deal with stringent lending regulations, MPLs are relatively new, and use what is known as FinTech (financial technology) to lend, collect, and distribute the capital they have. Consumers are starting to catch on, and in all, over $7 trillion is at risk of being displaced from the financial services market as a result of the growth of these organizations. MPLs are in an advantageous position because they are in a position where they utilize modern technology which insulate them from runaway systemic risk inherent in non-regulated financial transactions. Today, legislators are trying to figure out ways to regulate these organizations that won’t necessarily hinder their ability to innovate, but will work to keep them from taking advantage of consumers.

What is FinTech?
FinTech is technology used to track and manage finances. Your credit card, your PayPal account, and your personal account dashboard on your bank’s website is all FinTech. Using technology for finances isn’t new, but like many other technologies that have advanced as hardware and software improvements have been made, it’s just being repurposed outside of the traditional banking structure. FinTech today covers a whole lot of ground. So while banks have been doing this for a long time MPLs are backed with enough VC to start a small country and that capital allows these organizations to invest like no independent companies have been able to before. It often provides nice returns for a lot of investors. So while it is an affront to the banks, investors aren’t having to limit their sights to banks for financial services.

Nowadays, most of the money is flowing through asset managers who are taking the capital that is entrusted to them by investors and investing it in non-traditional ways through technology. Defining FinTech can be a challenge in itself as the language differs substantially depending on where the company operates and what type of lending facility it is being used for, but as far as the need to adhere to federal regulations, new FinTech models present gray areas that are likely going to have to be addressed at local or state levels as regulations haven’t been implemented yet. Federal investigators have been looking at the sector for much of the past five years. So while the traditional banking structures are threatened by these restrictions on what they can and can’t do with the capital, the new marketplace lenders have been able to do more with less.

Payday Loans
Independent lenders have been around forever. Tales around the shylock that will come and pay people a visit if you don’t pay their bookie are all over the culture. One lending organization that has been very controversial is the payday loan market. In essence a person that needs fast money can take out a short-term, high-interest loan. If they pay it back by the next paycheck, no harm, no foul, the lender takes its small fee and everyone is happy.

The bad things start happening when they can’t pay the whole loan back on time. Once the loan is past due, it is basically renewed with interest added. Most of the people that will utilize this service need a couple hundred dollars quick and can’t wait until their next paycheck. If the borrower can’t pay, they are making a situation that was already dire, much, much worse. These loans have been outlawed in several U.S. states for their predatory nature, but in the places that haven’t outlawed them, they are seeing new challenges in the form of FinTech lenders.

FinTech lenders like LendUP and Elevate are now seeking to disrupt the payday lending industry by offering people who are in need of small, short-term loans, money on dramatically different terms. The biggest difference is that instead of resorting to heavy-handed, predatory tactics, they work with borrowers so they don’t get in too deep. So while the payday loans may have been convenient for the borrower, one misstep would put them up against it--the new FinTech model is helping people rebuild their credit through data driven analysis.

What FinTech services do you currently use? Would you recommend one to others? Leave your thoughts in the comments below.

Getting to Know Technology: Processor
Your IT is Your Business’ Health... We Can Help Ta...


No comments made yet. Be the first to submit a comment
Already Registered? Login Here
Saturday, September 22 2018

Captcha Image

Mobile? Grab this Article!


Tag Cloud

Tip of the Week Security Technology Best Practices Privacy Internet Network Security Business Management Business Computing Google Cloud Tech Term Software Hackers User Tips Hardware Malware Mobile Devices Windows Cybersecurity Microsoft Computer Data Backup Efficiency Hosted Solutions Innovation Cybercrime Browser Productivity Apps Smartphone Data Recovery Data Security Smartphones Operating System Internet of Things Android Mobile Device Management Backup Vulnerability Office 365 Business Continuity Data Money Phishing Business Email Outsourced IT Alert Law Enforcement Ransomware Chrome Collaboration Network Microsoft Office Saving Money IT Services IT Support Managed IT Services VoIP Server Disaster Recovery IT Support Best Practice Windows 10 Information Two-factor Authentication Cloud Computing Spam Employer-Employee Relationship Router Applications Google Drive Small Business Windows 10 Computers Virtualization Upgrade Information Technology Managed Service Provider Managed IT Unsupported Software Telephone Systems Gadgets Communications Tech Support App Blockchain Facebook Fraud Bring Your Own Device Users Password Mobile Security Automation SaaS Proactive IT Quick Tips User Error Application Hosted Solution Google Assistant Data Storage Avoiding Downtime Hacking Safety WiFi Gmail Cortana Networking Mobile Device OneNote Save Money Communication Holiday Artificial Intelligence Risk Management Audit Google Docs Budget Data Protection Patch Management Government Wireless Charging Devices Wireless Technology Data Management Passwords Wi-Fi Robot Update Cost Management Managed IT Services Miscellaneous Data Breach The Internet of Things Social Media Shortcut Productivity Politics Augmented Reality Travel iPhone Sports Commerce WannaCry VPN BDR Managed Service Excel Data storage Apple Webinar History Printing Telephony Remote Computing Tablets Health Maintenance Consultant Sales Proactive Projects Samsung Internet Exlporer PowerPoint Remote Monitoring Storage Social Engineering Vendor Sync Evernote Uninterrupted Power Supply Settings Edge IT solutions FAQ Wireless Legal NFL Search eWaste Encryption Hybrid Cloud Touchscreen Retail Mobility Websites Identity Antivirus Wireless Internet Laptop Identities Employee-Employer Relationship iOS WIndows Server 2008 Transportation Data Loss Ciminal Windows 10s HBO Private Cloud Charger Value Word Device Security Amazon Files Screen Mirroring Conferencing Data Theft Data Privacy Computer Care DDoS Nanotechnology Gamification Emergency Unified Threat Management Disaster Touchpad Legislation Language Business Technology Recovery Going Green Adobe Social Workers Meetings Project Management Point of Sale Software as a Service Solid State Drive Windows Ink Virtual Assistant Emails Cast Gifts Computing Hard Drive Root Cause Analysis Memory Upgrades Humor Comparison Testing Identity Theft Computer Fan Administrator Licensing Updates Computer Forensics Lithium-ion battery Microsoft Excel IT budget Bandwidth Hard Disk Drive Streaming Media IT Management Outlook Google Maps Spyware Alexa for Business Marketing BYOD Credit Cards App store Chromebook Microsoft Word Financial Specifications Virus Workplace Tips Camera Vendor Management Access Management File Sharing Chromecast IT Solutions Reputation Education Hiring/Firing Mobile Computing Video Games Experience Congratulations Virtual Reality Work/Life Balance Training Monitors Current Events Electronic Medical Records Text Messaging Crowdsourcing Employer Employee Relationship Television CrashOverride Compliance Benefits Phone System Save Time Printers Company Culture Office tips Computer Accessories Advertising Battery Regulation Smart Technology Flexibility Music Instant Messaging Hacker Twitter Analytics Scalability End of Support Keyboard HaaS Entertainment Black Market Cleaning Relocation Big Data Automobile Office Managing Stress Personal Information Thank You USB Worker How To Books Cache PDF Scam es