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Top 10 Creative Fintech Solutions and Offerings

The fast advancement of technology and a new breed of entrepreneurs with a keen interest and understanding of finance have brought about fintech. One more very important feature that has improved innovation in this industry is the thought of improving the experience of customers and serving to several borrowers pain points. These were once in a while serviced by traditional banks. The gaps monitored by fintech pioneers led to an ever-expanding lending market serving the particular requirements of smaller borrowers.

Here is a look at the top 10 creations in this industry.

Peer-to-Peer (P2P) lending

This is the best example of win-win conditions using a tech platform for both lenders and borrowers. Peer-to-peer lending gives the access to borrowers access to financing options from several individuals. The process of receiving the loan is easier as compared to that in traditional banks. Lenders on these platforms are normal investors who are looking at securing their savings and investments in a place that gives better returns as compared to the rate of interest provided in traditional debt markets. The platform takes on the task of evaluating and pre-approving the borrowers, thereby providing the lenders an easy way to discover the right borrower for them.

Alternative credit scoring

The traditional method of scoring credit will not qualify for small businesses and self-employed individuals for getting loans. Their strict and outdated standards for credit scoring only qualify either big, established companies for loans, or individuals with fixed income jobs, who could get a salary slip to furnish to help their loan application. Therefore, it was becoming more and more difficult for small business owners and SMEs to protect their funding based on traditional approaches of credit scoring.

The fintech industry addresses this requirement of a more flexible and qualitative scoring that could accept a proper analysis of credit scores in these cases by using different data points, such as, percentile credit scoring against similar borrowers. Social signals are still another innovative parameter that is used to offer flexible credit scoring. These elements combine with deep learning algorithms helped to get better lending decisions for fintech, over time.

Transaction delivery

In the age of Big Data and IoT, it is looking forwards to that tech companies will work towards collecting the data as much as possible to oil their functions and following expansions. After all, it is through studying historical data and creating forecasts completely based on them that companies can create new strategies and develop better products. Data that gives fintech companies valuable insights into what customers truly required.

Fintech companies collect the data such data through free digital products like expense management apps. These apps will collect useful data based on a customer’s potential to pay premiums, buy mutual funds, or investments in real estate. Companies will exchange these data and insights to third-party financial products and receive a commission on sales.

Small ticket loans

Small ticket loans are normally not supported by traditional banks because of the low margins and high costs for underwriting. Consumers who want to buy big-ticket items and high-priced white goods, normally discover it very difficult to fund their purchase due to this reason. Fintech lending companies have found out these needs and now cater to borrowers through BNPL providings. These ‘Buy Now and Pay Later’ funds let the consumers buy new products with a click of a button, without required to fill essential loan documents or waiting for approvals.

Fintech companies provide these funding solutions to give this customer data to Original Equipment Manufacturers (OEMs) who stand to get the most from the expanded budget of their goods. Customer data when sieved through machine-learning and deep-learning algorithms, gives OEMs insights that given access to them to initiate highly customized offerings in the market.

Alternative insurance underwriting

Wrong premium calculations have become a standard in traditional insurance underwriting. In these cases, people of similar age, height, and weight, and teetotallers will be allocated to the same insurance premiums. However, the premiums will take any other qualitative elements into accounts such as the health patterns and exercise patterns of these individuals. Two insurance applicants with the same introductory characteristics could be a allocated premium based on more qualitative characteristics of their health.

Alternative insurance underwriting will take these fine dissimilarities into account by collecting the data based on the medical history, lifestyle, and social signals. This helps them remove the normalization in the actuarial terms that give inaccurate results to traditional underwriting approaches. This data merged with algorithms and analytics that helps the fintech providing insurance products that give highly customized insurance premiums to their applicants along with other options for payment based on their specific requirements and qualification.

Digital wallets

The step beyond paper and plastic money; the digital wallet has transformed payments covering the world. These digital wallets are work as both a ‘no-frills’ bank and also work as a payment gateway. This system allows the consumers to put some amount of virtual cash into their digital wallets and use it for both online and offline transactions where merchants will allow the payments through digital wallets.

Digital wallets are designed to give payment benefits to consumers. They receive their incomes through a small amount of fee that is charged to the merchants. The end-users of wallets are normally consumers and stores that sell their products and services to these consumers.

Digital banking

Taking the digital way to traditional banking is called digital banking. Digital banks are considered by the whole digital presence sans any physical headquarter or branches. They work similarly to traditional banks do but are no-frill service providers with an end-to-end digital infrastructure. The financial advantage they receive by not investing any kind of money in manpower and real estate is passed on to their customers and this is a major winning point for both digital banks and their customer base.

Payment gateways

With the rise in e-commerce, the requirement is to have secured payment gateways has expanded manifold for merchant sites. Payment gateways allow the consumers to pay through several payment modes while doing shopping on e-commerce sites. Shoppers can make payments through debit and credit cards, cryptocurrencies, and digital wallets. Traditional banks will normally charge huge amounts as a fee to process transactions using any of these other methods of payment, which is not really feasible for merchants.

Fintech companies used technology here to combine multiple payment methods into user-friendly apps and payment gateways that can be seamlessly combined into their websites.

Asset management

Fintech-based asset management allows the investors to create portfolios by buying the stocks and mutual funds without making a payment as a commission fee. Although the asset that they buy are priced a bit higher than the original asset price, still the amount of savings they end up with by not paying any commission fees, that makes the investment worthwhile and the asset price positive.

Asset management companies can make this happen by gathering the investor data in exchange for removing the commission fee. They send this data to traders who have high frequency and capable of influencing asset prices.

Digital Insurance

The last but not least of the top 10 creative fintech solutions is digital insurance. As the name recommends that digital insurance is hugely based on digital infrastructure and very quick underwriting processes. Another insurance underwriting has authorized these fintech insurance companies to give better and cheaper coverage for home and life insurances while doing pricing for premiums at inconstant rates depending on qualitative rather than quantitative elements.

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