The word “fintech” is simply a combination of the words “financial” and “technology”. It describes the use of technology to deliver financial services and products to consumers. This could be in the areas of banking, insurance, investing – anything that relates to finance. The word Fintech is used to describe new tech that seeks to improve and automate the delivery and use of financial services. At its core, fintech is utilized to help companies, business owners, and consumers better manage their financial operations, processes, and lives by utilizing specialized software and algorithms that are used on computers and, increasingly, smartphones. Fintech, the word, is a combination of “financial technology.”
When fintech emerged in the 21st century, the term was initially applied to the technology employed at the back-end systems of established financial institutions. Since then, however, there has been a shift to more consumer-oriented services and therefore a more consumer-oriented definition. Fintech now includes different sectors and industries such as education, retail banking, fundraising and nonprofit, and investment management, to name a few.
Although it’s a relatively new word, fintech is actually nothing new. Technology has always changed the financial industry. However the internet, combined with the widespread use of devices like smartphones and tablets, means the speed of this change has accelerated greatly in recent years.
Broadly, the term “financial technology” can apply to any innovation in how people transact business, from the invention of digital money to double-entry bookkeeping. Since the Internet revolution and the mobile Internet/smartphone revolution, however, financial technology has grown explosively. Fintech, which originally referred to the use of computer technology applied to the back office of banks or trading firms, now describes a broad variety of technological interventions into personal and commercial finance.
Fintech now describes a variety of financial activities, such as money transfers, depositing a check with your smartphone, bypassing a bank branch to apply for credit, raising money for a business startup, or managing your investments, generally without the assistance of a person. According to Mr Nelson Da Seglah, CEO of Korba, one of the leading Fintech companies in Africa, one-third of consumers utilize at least two or more fintech services and those consumers are also increasingly aware of fintech as a part of their daily lives.
Up until now, financial services institutions offered a variety of services under a single umbrella. The scope of these services encompassed a broad range from traditional banking activities to mortgage and trading services. In its most basic form, Fintech unbundles these services into individual offerings. The combination of streamlined offerings with technology enables fintech companies to be more efficient and cut down on costs associated with each transaction.
If one word can describe how many fintech innovations have affected traditional trading, banking, financial advice, and products, it’s ‘disruption,’ like financial products and services that were once the realm of branches, salesmen, and desktops move toward mobile devices or simply democratize away from large, entrenched institutions.
Fintech is changing the world of finance for consumers in a myriad of ways. For example, you can now open a bank account over the internet, without physically visiting a bank. You can link the account to your smartphone and use it to monitor your transactions. You can even turn your smartphone into a “digital wallet” and use it to pay for things using money in your account.
Fintech is also rapidly changing the insurance and investment industries. In some countries, car insurance providers now sell “telematics-based” insurance where your driving is monitored using data collected via your smartphone or a “black box” fitted in your car. This data can then be used to determine how much you pay for your insurance policy. In the future, it may be possible to buy insurance on a short-term or “pay as you go” basis.
Advances in technology means consumers can also invest over the internet on an “execution only” basis without any face-to-face interaction. In time, you may be able to get automated financial advice or “robo advice” with little or no human interaction.
Entrenched, traditional banks have been paying attention, however, and have invested heavily into becoming more like the companies that seek to disrupt them. That said, many tech-savvy industry watchers warn that keeping apace of fintech-inspired innovations requires more than just ramped-up tech spending. Rather, competing with lighter-on-their-feet startups requires a significant change in thinking, processes, decision-making, and even overall corporate structure.
How Do Fintech Companies Make Money?
Fintechs make money in different ways depending on their specialty. Banking fintechs, for example, may generate revenue from fees, loan interest, and selling financial products. Investment apps may charge brokerage fees, utilize payment for order flow (PfOF), or collect a percentage of assets under management (AUM). Payments apps may earn interest on cash amounts and charge for features like earlier withdrawals or credit card use.
Potential benefits
Speed and convenience
Fintech products tend to be delivered online and so are easier and quicker for consumers to access.
Greater choice
Consumers benefit from a greater choice of products and services because they can be bought remotely, regardless of location.
Cheaper deals
Fintech companies may not need to invest money in a physical infrastructure like a branch network so may be able to offer cheaper deals to consumers.
More personalised products
Technology allows fintech companies to collect and store more information on customers so they may be able to offer consumers more personalised products or services.
Potential risks
Unclear rights
Fintech companies may be new to the financial industry and use different business models to traditional providers. This can make it harder to ascertain which ones are regulated, and what your rights are if something goes wrong.
Making a rash decision
Financial products that are bought instantly online without ever meeting anyone face-to-face may make it easier for consumers to make quick, uninformed decisions.
Technology-based risks
Financial products bought online may leave you more exposed to technology-based risks. For example, your personal data could be mis-used or you could fall victim to cybercrime.
Financial exclusion
While technology increases choice and access for most consumers, it can exclude those who don’t know how to use the internet or devices like computers, smartphones and tablets.
Market Highlights
INTERBANK FOREX RATES 💴💰
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CRYPTOCURRENCY MARKET
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Binance Coin $306.95 🔼1.37%
Ripple $0.3768 🔼0.34%
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Dogecoin $0.08169 🔼0.62%
Polygon $1.27 🔼0.58%
💵Bloomberg USDGHS Cross Rate – *12.7500* (YTD -🔺️25.51%)
💰CBG FOREX RATES💵
US$GH¢ Buy 10.9975 Sell 12.9975
GB£GH¢ Buy 13.2669 Sell 15.7413
EU€GH¢ Buy 11.6678 Sell 13.8501
CH¥GH¢ Buy 1.6000 Sell 1.8908
🔼GSE DAILY GAINERS ➖ PRICE ➖ %CHANGE
UNIL ➡Gh¢2.48 🔼+9.73%
🔻GSE DAILY LOSERS ➖ PRICE ➖ %CHANGE
GGBL ➡Gh¢1.37 🔻-9.87%
〽Inflation rate in Ghana ➡ 53.60%
🏦Ghana Reference Rate ➡ 33.25%
✳Policy Rate in Ghana ➡ 28.00%
¶ TREASURY RATES💸
91 – Day Discount Rate 32.6478% Interest Rate 35.5493%
182 – Day Discount Rate 30.1918% Interest Rate 35.5598%
364 – Day Discount Rate 25.4919% Interest Rate 34.2136%
🛢Petroleum Products – Average Price
🏗Petrol – Gh¢14.50/ltr (YTD-🔺️+16.94%)
🛢Diesel – Gh¢14.90/ltr (YTD-🔺️+2.05%)
⛽LPG – Gh¢11.00/kg (YTD-🔺️+19.57%)
🏧MARKET INDEXES
*Dow Jones Index🚂⛽ 32,816.92 -336.99 -1.02%
*S&P 500 🏦 3,970.04 -42.28 -1.05%
*Nasdaq Index📲💻 11,394.94 -195.46 -1.69%
* NYSE Composite Index 15,464.46 -120.46 -0.77%
*London FTSE 7,878.66 -29.06 -0.37%
*Germany DAX 15,209.74 -265.95 -1.72%
*Japan NIKKEI 225 27,407.56 -45.92 -0.17%
*Tokyo TOPIX Index 1,990.27 +1.87 +0.09%
*Hong Kong HANG SENG 19,860.91 -149.13 -0.75%
*Shanghai Shenzhen 300 4,052.54 -8.51 -0.21%
*S&P/ASX 200 Index 7,211.90 -95.13 -1.30%
*Bloomsberg EU 500 296.88 -3.41 -1.14%
*France CAC All-Tradable 5,395.15 -88.46 -1.61%
*Dubai DFM General Index 3,419.00 +7.13 +0.21%
*MOEX Russia Index 2,208.03 -4.37 -0.20%
*FTSE/JSE South Africa 70,884.68 -2,063.72 -2.83%
*Nairobi SE 20 Share 1,655.14 +2.04 +0.12%
*Nigeria SE Main 54,949.21 +302.83 +0.55%
*BBG EMEA World Index 202.37 -2.43 -1.19%
*GSE Composite Index 2,425.37 -3.11 -0.13%
*GSE Financial Index 1,983.51 0.00 0.00%
GSE INDEXES ⏸ 2023 YTD RETURNS%
*GSE Composite Index 2,425.37 🔻-0.76%
*GSE Financial Index 1,983.51 🔻-3.37%
🔼GSE 2023 GAINERS ➖ PRICE ➖ YTD%
BOPP ➡Gh¢9.65 🔼+26.14%
TOTAL ➡Gh¢4.57 🔼+14.25%
MTNGH ➡Gh¢0.92 🔼+4.55%
🔻GSE 2023 LOSERS ➖ PRICE ➖ YTD%
UNIL ➡Gh¢2.48 🔻-36.08%
GGBL ➡Gh¢1.37 🔻-33.17%
FML ➡Gh¢2.07 🔻-31.00%
CAL ➡Gh¢0.51 🔻-21.54%
GCB ➡Gh¢3.15 🔻-20.05%
COMMODITIES MARKET
*Brent Crude USD/barrel⛽ 82.85 -0.31 -0.37%
*Natural Gas 🏭 USD/million BTUS 2.57 +0.02 +0.67%
*Gold 👑 USD/troy ounce 1,815.60 -1.50 -0.08%
*Silver 💍 USD/troy ounce 20.70 -0.24 -1.15%
*Corn 🌽 USd/bushel 651.00 +1.75 +0.27%
*Cocoa 🍫 USD/metric ton 2,748.00 -22.00 -0.79%
*Coffee ☕ USd/pound 187.70 -2.00 -1.05%
*Sugar🎂 USd/pound 19.67 -0.67 -3.29%
*Lumber USD/1000 board feet 400.80 +11.60 +2.98%
Rubber USd/100kg 139.50 -2.40 -1.69%
Sources: Bank of Ghana, Bloomberg, GSE, Investopedia, Reuters, Doobia, BBC.
Mark G. Darko, Accra
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