4 reasons why Fintech companies are growing rapidly

Traditionally, the banking and finance industry does not change much. It is the same set of companies which dominate the banking and finance industry. However, when you look at the growth of these companies, it is sluggish as well. However, the Fintech sector is fast emerging in the banking and finance field. Moreover, the Fintech companies are growing at a rapid pace as well.
There is actually no dearth of investors who are looking to invest in the Fintech companies. As a result, the Fintech companies have no short on funds as well. If you look into the growth of the Fintech companies, you will realize that it is normal for them to grow at 30% per annum. However, there are quite a few reasons as to why they are growing at such a brisk pace.

1. Innovative solutions

Normally, the banking and finance industry depends on the normal software developers as well as the IT industry in order to develop the products. These companies offer the plain vanilla products. They do not allow it customize on these products. They just offer the products to the banks which will help them in managing their systems.
On the other hand, when you’re looking at the Fintech industry, you will realize that they are offering newer and innovative products. They are not just offering software and products which will help them manage their business but which will help them actually grow their business. As a result, the banking and finance industry is able to expand their business with the help of the products and services which are offered by the Fintech industry.
Moreover, the Fintech is industry solving age-old problems of non-performing assets for the banks as well. As a result, the banking and finance industry is actually using their products in a significant way in order to better their balance sheet.

2. Newer technologies

The Fintech industry is using newer technologies like artificial intelligence as well as machine learning in order to conduct the predictive analysis. With the help of this predictive analysis, banks, as well as non-banking finance companies, are able to decide better whether they should learn to ascertain group of customers are not.
With the help of this predictive analysis as well, they can easily decide whether their balance sheet is stressed or whether they are disbursing the loans within their risk levels. With the help of this predictive analysis, they will be able to easily chart out the future course of action as well. As a result, it will become much easier for them to secure their business. When the non-performing assets are on the lower side, their profits will increase exponentially. This is one of the main reasons why the products of Fintech companies are actually being used widely by the banking and finance industry.

3. Increase the credibility

Earlier, whenever a new start-up or a Fintech company presented their products to banking and finance industry, there was limited credibility. As a result, most of the banking and finance industry actually ignored the products. However, these days most of the Fintech companies which are developing the products are backed by credible investors. When they are backed by credible investors, the credibility increases significantly. As a result, the banking and finance companies can no longer ignore their products as well. This ensures that they are able to directly pitch to the decision makers. When they are able to pitch to the decision makers, they will be able to certainly convert them into their innovative products. This is making the Fintech industry expand at a rapid pace. As a result, more and more investors are looking to invest in the Fintech industry which again increases their credibility. Thus, they are able to easily expand their business and become more and more credible. With marquee name clients, it will become easier for them to pitch to newer customers as well. This will mean that they are able to easily find more clients in the future as well with or without the investors.

4. No dearth of capital

One of the main reasons why the Fintech companies are expanding at such a brisk pace is because there is no shortage of capital. Most of the high net worth individuals, as well as corporate investors, are wisely investing in the Fintech companies. That is why they do not have to borrow from the banks. Also, since they are diluting the equity, they do not have to worry about paying interest as well. As a result, they are able to make a significant amount of investment in their products. When they make a significant amount of investment in their products, it becomes easier for them to develop the products further. Moreover, with incoming contracts, they are able to easily get significant cash flow which ensures that you are able to invest in research and development.
With such significant investment in research and development, they are able to develop the products better than the software companies or the IT industry. As a result, the banking and finance companies have got no option but to use their products. In case, banking and finance companies ignore their product, their competitors will certainly use them. This will result in a loss of business for them. As a result, they have got no other option but to adopt these innovative products in order to maintain their market share and also in order to consistently expand their business. This is another reason why the Fintech companies are expanding at such a rapid pace.
In many of the cases, the Fintech companies are going for IPO as well which is opening up more capital for them and also increasing the credibility significantly.
As you can see, the environment, as well as the ecosystem, seems to be just right for the Fintech companies to expand at a brisk pace. Moreover, they are catering to global clients which ensure that they are able to easily expand their footprint. With increasing investor attention, it is easier for them to expand at a brisk pace and that is exactly what is happening globally.