Should You Consider Investing in Fintech

November 30, 2022

Should You Consider Investing in Fintech

Is it worth investing in fintech startups? Payrow recently touched on this subject during a conversation with experts from www.insidermonkey.com – a well-known financial media outlet.  

In 2022, the rapid growth in investments in fintech slowed down noticeably; and the UK economy is going through tough times.

In our article, we share the main trends in the field of fintech and explain why investing in the financial technology sector can be a profitable decision to make.

Check out this extract from the article below:

Main trends in fintech 

Let's consider the main trends in fintech, and analyze why they are apt to grow. 

— Open banking & Embedded finance 

Investors are still trying to identify companies that are committed to making payments easier for businesses and individuals. The digital banking revolution is in full swing and investors have been opening their coffers for companies that have the potential to make an impact in this now saturated field. 

A central idea in this field is open banking, which is basically a less regulatory-laden version of what is offered in traditional banking. Open banking allows companies that are not licensed lenders to offer financial services in a convenient and user-friendly manner. These companies have been able to make a lot of progress on the digital payments front, a fact that is corroborated by investment trends.  

Another key idea here is embedded finance. Embedded finance is when companies that are not financial firms incorporate financial products into their offerings. This is currently very much en vogue with a number of major companies that are not financial institutions offering banking-as-a-service. This is most often done via payment cards, lending programs, and digital wallets. 

— Democratization of the non-public asset market 

This market has become more transparent, which has led to new opportunities opening up for retail investors. Now there are public marketplaces for transacting with shares of private companies, tools for capital management, and avenues for the financing of new business models.

Looking ahead, regulators are likely to either limit access to the non-public asset market or seek to introduce frameworks that will allow investors to continue while reducing risk exposure.   

— Products for freelancers 

Traditional banks do not really know how to work with freelancers and the self-employed. Because their income tends to be unstable, freelancers have problems when trying to obtain financing. More and more fintech platforms have developed credit solutions tailored to freelance workers and the self-employed that make their lives much easier. For example, the new fintech firm Payrow has singled out work with freelancers as a separate area. Payrow offers convenient functionality for freelancers and SME, which simplifies business processes and manages finances with digital payment solutions.

Covid has led to an increase in the number of remote workers and freelancers, and according to Payrow experts, this trend will continue. Which means that the demand for online financial services will only grow, because modern fintech companies offer higher interest rates, lower fees (or no fees), and a higher level of service and support than traditional banks.

— Fintech for open ecosystems 

Open ecosystems that serve as exchange hubs for independent parties have emerged as preferable alternatives to marketplaces and other kinds of centralized platforms. In stride with this, universal checkout services and embedded investment products are actively developing.

Looking ahead, if independent parties unite, the fragmentation of the traditional financial market and the specialization of fintech solutions will increase. And, as a result, the gap in services and quality between closed ecosystems, centralized platforms, and marketplaces will grow.

Read the full article on Insidermonkey!

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