Fintech arrived and innovated financial services, understand what it is.
The term fintech has been gaining increasing popularity, but do you truly understand what fintech means? The term originated from the combination of the words financial technology — or financial technology, in Portuguese. It is used to refer to startups or companies that develop fully digital financial products.
When you put it that way, fintechs might seem far removed from our reality, but are you familiar with companies like Nubank, PicPay, PagSeguro, and Banco Inter? They all fall into this category. If you'd like to better understand how fintechs work, keep reading!
What is a fintech?
Although the name is different, fintechs are already quite widespread in Brazil. We are talking about young companies focused on financial products developed for the digital environment.
Fintechs frequently offer services such as digital accounts, credit cards, loans, insurance, debit cards, and more. Their main advantage, compared to traditional financial institutions, is their use of technology.
In many scenarios, fintechs don't even have a physical customer service structure, as all transactions are handled through websites and mobile applications, simplifying credit operations and making access more convenient.
In 2020, more than 740 fintechs were mapped and verified in Brazil. They all emerge primarily as a way to redesign the financial services sector and break through the bureaucratic obstacles of the traditional market.
Main advantages
The use of technology to offer financial solutions is the main differentiating factor of fintechs, and with this, the user ends up having many other advantages available to them, such as:
Less bureaucracy: Instead of waiting in line at the bank and carrying multiple copies of documents, you can open a digital account In seconds, right from your living room sofa.
Attractive prices: Many fintech companies develop innovative products with very low acquisition costs, and sometimes even without costs, as is the case with several credit cards. One of the reasons is that they save a lot of money by not having large physical structures.
Intuitive platforms: Websites and apps are usually quite intuitive, which makes it easy to access any service and, especially, support. You can get answers to your questions and dispute invoices, for example, in just a few minutes and online.
What is the difference between fintech and startup?
Startups are companies still in their initial stages, created with the purpose of being innovative and strongly characterized by the use of technology as a way to streamline processes. These companies have not yet shown a profit, but have strong growth potential.
However, startups don't necessarily have to be part of the financial sector, as is the case with fintechs. Startups can operate in diverse segments, such as entertainment, technology, food, clothing, or any other.
Therefore, it's possible to say that fintechs can also be startups in their early stages, but not all startups are fintechs.
Are Fintechs trustworthy?
The idea of having a digital bank account without face-to-face contact with a manager or branch may still cause insecurity among more conservative users. However, the use of technology to make life easier is a global trend, and financial institutions could not be left out of it.
It is important to make it clear that, in Brazil, the entire financial sector is closely monitored by the government through regulatory bodies. All companies that are created with the intention of offering financial products are required to follow a series of specific rules, including fintechs.
One of the regulatory bodies is the Central Bank itself. It monitors the market and the activities of the financial sector in Brazil. If you want to know if a fintech company is legitimate, you can consult the Central Bank's database through [link/method]. from this link. Simply type the company name or CNPJ (Brazilian company tax ID) into the search field.
So, did you understand what a fintech is? In short, these are companies that offer financial services in a practical and easy way, using technology to eliminate unnecessary bureaucracy. Therefore, getting to know fintechs better is an important step in finding better alternatives to traditional banking services.
Now, how about reading our article about the... Differences between digital and physical banks.? Look!
