Technological advances require life in the present to be faster and more practical. Various applications are created as technologies that replace various human activities. Several years, financial technology (fintech) application has developed very rapidly. Fintech puts technology as the foundation of business in finance. But most of thepeoplesdo not pay attention to the history of its development. We can learn from history to develop more innovative and applicative fintech.
History of Fintech in the World
Fintech emerged beginning with the advance of industrial technology. The development of computers and the internet network in 1966 opened a great opportunity for financial entrepreneurs to grow their business globally.
In the 1980s, banks began to use data recording systems that are easily accessible via computer. From here, the seeds of Fintech start appearing on the back office of banks and other capital facilities. In 1982, E-Trade brought Fintech to a brighter direction by allowing an electronic banking system for investors. Thanks to the growth of the internet in the 1990s, the E-Trade financial model is increasingly crowded. One of them is the site brokerage online stocks that make it easier for investors to invest their capital.
1998 was the time when banks began to introduceonline banking for its customers. Fintech became increasingly easy to use by thewider community, also more known. Practical and far-reaching payouts with conventional payment methods have made the development of Fintech more intense. More efficient financial services using technology and software can be easily achieved with Fintech.
The development of Fintech in Indonesia
Fintech presence in Indonesia was mainly driven by internet users. Based on the results of the 2016 survey of the Association of Internet Service Providers Indonesia (APJII) internet users reached 132.7 million people from a total of 256.2 million inhabitants of Indonesia. The use of digital technology has changed the behavior of society such as social interaction up to the process of buying and selling online (e-commerce). With this encouragement that makes the players in the financial industry to develop Fintech. Financial markets in Indonesia have also not been fully addressed by the formal financial sector which is a great potential for fintech to grow.
Fintech startup company has been developed in Indonesia since the founding of the association of Indonesia’sfinancial technology company in September 2015. But all the facilities offered by fintech is strongly influenced by thepublic trust. One of the factors to increase public confidence in the existence of regulatory regimes to protect the people but still pay attention to the development of fintech. In addition,fintech technology must be supported by IT infrastructures such as a reliable application system, good connection, cheap and reliable data center, and valid citizens identity (KTP Elektronik). The development of fintech also should be monitored and supported by the government to have a significant impact.
Financial Technology Type Classification
The company’s operational business, such as payroll, employee management, financing system, and so on need to be automated.Today, many startups see it as an opportunity to open a business field. Jojonomic, for example, one of the startup types engaged in asset management. This company provides Expense Management System platform to help companies run a business more practical and efficient. With this startup like Jojonomic, Indonesian people can be more paperless, because all that was originally done manually, simply done through the application.
Fundraising, charity, and other social activities can now also be done through crowdfunding startup. More precisely, crowdfunding is a startup that provides a fundraising platform to be channeled back to people in need, such as victims of natural disasters, victims of war, fund-making work, and so on. Fundraising is done on an online regular basis. One example of the biggest crowdfunding startup is Kitabisa.com. This startup creates an advancedsystem to help others in an easier, safer and more efficient way to do the crowdfunding activities.
E-Money or electronic money, as the name implies, is money packaged into the digital world.It also is known as electronic wallets. This money can generally be used to shop, pay bills, and others through apps. One of those electronic wallets is Doku. Doku is an application that can be easily uploaded to a smartphone. Doku comes with acredit card and e-card or credit card features such as cash wallet, which we can be used to online shop as well offline anytime and anywhere through the apps.
This type of startup in the insurance sector is quite interesting. Since insurance usually we know all this time is a conventional insurance, where we set aside a monthly fee as mandatory due to benefit from the insurance in the future. The insurance startup provides services to users in the form of nearest hospital information, trusted doctors, hospital referrals, and so on. HiOscar.com is one of such startup geniuses. These startups are built with the aim of providing a simple, intuitive, and proactive way to help customers navigate their health systems.This startupcollaborates with providers or with world-class doctors and the best hospitals that want to work together to help manage the health of its members.
Peer to Peer (P2P) Lending is a startup that provides a lending platform on anonlineregular basis. Capital business is often considered the most vital part to open a business, it gives ideasto many parties to establish this type of startup. Thus, for people who need funds to open or expand their business, now they can use startup services in the field of P2P lending. Moneysteman.com is one of the startup examples. This startup aims to provide financial services to thecommunity by simply filling out the form on the website Uangteman.com within 5 minutes, and meet the requirements.
The growing ofe-commerce companies also triggered more startups that became the bridge between e-commerce with customers, especially in terms of payment systems. The service provided by thestartup for e-commerce is called payment gateway service. A payment gateway allows people to choose avariety of digital payment gateway methods managed by numbers ofstart-up companies,thereby increasing the sales volume of e-commerce. One of the biggest payment gateway provider is iPay.
Remittance is a type of startup that specializes in providing money transfer services between countries. Many remittance startups aretrying to help people who do not have an account or access to banking services. The existence of this type of startup is very helpful to the workers or anyone who maybe have family members abroad because the process of delivery is easy with cheaper cost. In Singapore for example, one of the biggest remittance startups is SingX.
Stocks, forex, mutual funds, and so forth, are investments that are already familiar. Securities startup can be said as a type of companies that provides a platform to invest shares online. The startup example is Bareksa.com. Founded on February 17, 2013. Bareksa.com is among the firstsecurities startup in Indonesia that provides a platform to conduct mutual fund trading online, providing data services, information, investment tools of mutual funds, stocks, bonds, and others.
It is expected that fintech will continue to grow and follow the ways that need to be done as follows:
Educate consumers to make smarter financial decisions
Convince consumers that nobody wants a repeat of the financial crisis. Instead of offering multiple free credit and credit card equip lines, fintech’s future focuses on helping consumers make smarter financial decisions, encouraging them to save money and present a sensible and financially understandable investment strategy.
Helping consumers in achieving their financial goals is what is done by fintech companies like PlanWise by providing educational tools and formats to help consumers evaluate their financial status and offer recommendations for improving personal habits. Other fintech has better services such as providing free advices and information to help customers make better choices about spending, borrowing and saving. It is very helpful to educate younger consumers, including students who may be considering a loan and may face debt in the future.
Providing compliance assistance to government regulations
The world of banking is currently facing increasingly binding regulations due to various irregularities in the past, both for offline and online transactions. This means institutions and companies will have more time devoted to ensuring that operations have been complying with theregulation. Threats from fraud and identity theft by international syndycates also put pressure on financial institutions.
Companies like Trulioo are constantly looking for new solutions that help financial institutions and financial firms integrate operations with regulatory compliance in their transaction processing software. Even for fintech companies, compliance issues will continue to be a challenge. Many companies are determined to find solutions that make these challenges more manageable.
Improve your online shopping experience
Consumers are now aware of the risks of identity data theft and they have experience in better online shopping that allows them to make purchases quickly and safely. This market will be able to grow as the billions of people who transact online in the next five years. That’s why companies like the Stripe are emerging and helping to simplify and secure an online retail deal environment for both retailers and consumers, delivering the customer’s desired experience while they are shopping. WePay and Flint also provide further assistance as a way to receive payments and encourage retail spending.
Offers new avenues for loans
Some rapid changes in lending market has made many consumers and small businesses struggling to get financing. Historical lending problem are some of dominant factors that made banks unwilling to give loans to blacklisted entrepreneurs. The reluctance of some financial institutions to help this niche segment has created an opportunity market for fintech companies.
Companies like LendUp help consumers realize that they do not have to rely on payday loan services to get a small, fast loan. They can instead switch to online partners. Even companies like SoFi help consumers and businesses refinance existing loans, student loans, and mortgages to get better interest rates and help improve the financial position. Meanwhile LendFriend, inspired by many popular crowdfunding sites, provide unique services where customers can borrow and lend their money to people they already know.
Payment speed and collection
No one wants money can hinder a good business relationship, but often an invoice is not paid. For small business owners, billing can be a challenge. However, the new FinTech company offers a promising future for more businesses to get paid faster. Companies like Invoice Ninja provide solutions to help small businesses collect their payments so they can increase their monthly recurring income.
Protect assets from fraud
We all hope in the coming years fintech will continue to find ways in order to counter financial crime and push people who intend to commit fraud with asset protection technology. This includes sustainable development into more advanced authentication technologies for e-commerce customers, banks, and online payments and loan providers.
Some sample of recent asset protection technology application is Automated Clearing House (ACH) transaction which very effective to handle rampant credit card cheats in very fast process. Because there are still many winning swindlers in this arena, this challenge is being handled by a new fintech company that wants to defeat this villain and helps secure consumer assets.
Many consumers have shield away from investment vehicles after the investment company’s reputation hit an all-time low due to cost overruns, hidden costs, and bad investment advice. Fintech companies, such as Wealthfront, Robinhood, and Addepar, will continue to emerge to help empower even small investors, so they feel comfortable re-investing.
A company called Acorns also shows the average investor or newbie who is using a changed reserve is the best way to start creating an investment portfolio that will offer substantial benefits in the future.Fintech companies like this can essentially change the world of investments, helping to revive interest in stocks and mutual funds.
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