International experience shows that the Fintech phenomenon is not a fad or a passing trend: these digital companies, whose main activity is to provide financial services through the use of technology, constitute an ecosystem that is mostly made up of incipient, new and innovative companies, calling to revolutionize the financial industry.
The term Fintech is the union of the English words: Finance + Technology. It began to be used in the 80's, but it took almost 30 years for its use to spread, cross the boundaries of specialized groups and become known.
Fintechs are companies of digital origin whose main activity is to provide financial services through the use of technology. They represent a challenge for the financial industry in terms of the products and services offered, the experience they provide and the way they operate their business.
Let's analyze some of their main categories, as well as the most relevant in Argentina:
Through their platforms, the loan taker can select the required amount and the desired repayment term, variables that are subsequently validated by the company. Examples:
Companies in this subcategory focus on providing financing solutions to small and medium-sized companies, which usually allocate loans for the purchase of working capital. During 2017, they granted loans in Argentina for an average amount of AR$250,000 with terms ranging from three to six months. All the companies surveyed indicated having fewer than 10 employees, which places the subcategory as the one with the lowest number of employees in the entire ecosystem.
Payments and transfers:
They offer a wide variety of services, among which the virtual wallet stands out: a digital payment tool to send and receive money, pay for services and make purchases in stores and on websites. At the same time, they provide tools that facilitate transfers abroad or allow the payment of sales made in other countries.
Despite providing different services, the members of this category coincide in their value proposition: a better user experience, at a lower cost and in a shorter amount of time.
B2B Fintech Services:
The companies in this category provide solutions to businesses, SMEs and large companies through a revenue model with a predominance of software as a service (SaaS). The services they offer vary greatly, although most of them coincide in providing their users with increased productivity. Solutions such as invoice discounting, supplier payments and sales management systems stand out.
Companies in this category are characterized by having digital platforms that allow the comparison and contracting of a varied insurance portfolio. Its value proposition is focused on the convenience of acquiring the product digitally, remotely and in less time, with a better user experience. Unlike traditional companies, they focus their operations exclusively on digital channels.
Blockchain and Crypto:
Most of the companies that make up this category offer the possibility of trading bitcoin and other digital currencies that would not be accessible if not for these digital platforms.
Fintechs are creating a new paradigm in terms of experience and access to new financial services, empowered by a change in customer behavior and sustained by new business models that leverage innovative technologies.