‘Fintech’ is a phrase increasingly bandied about in the media and in technology circles. Yet despite being in vogue, it’s a term many – including tech-savvy and clued up entrepreneurs – don’t quite have a handle on.

Indeed, it’s a fresh enough term to not yet feature in the online version of the Oxford dictionary.

However, its importance cannot be denied. One thing it is certainly not is a buzzword. Fintech is an area that is radically changing how we live as a society and how we do business professionally.

What is Fintech?

As a definition, Fintech is usually applied to the segment of the technology startup scene that is disrupting sectors such as mobile payments, money transfers, loans, fundraising and even asset management.

A recent report from Accenture found that global investment in Fintech has skyrocketed from $930 million back in 2008 to over $12 billion by the beginning of 2015. Europe experienced the highest growth rate, with an increase of 215% to $1.48 billion in 2014.

Furthermore, the associated reworking of financial regulations, new innovations, and customer behavior, means this figure will continue its sharp growth in the coming years.

Such is the impact of technology on how finance is run, cities like London actively and aggressively pursue technology talent to ensure it remains competitive.

The UK financial sector is the main driver of the country’s economic recovery from the global meltdown and the government is strongly aware that to continue driving forward, tech talent needs to sit alongside finance talent. The Office of the Mayor of London claims that 40% of the London workforce is made up of the financial and technology services alone.

Why Fintech matters to the business world

The rise of Fintech has forever changed the way companies do business. The traditional model of a new business turning directly to its local high street bank and/or a conventional investor is no longer the only game in town.

From crowdsourcing to mobile payments, there has never been as much choice to entrepreneurs as there is presently. It’s never been cheaper to not only set-up your business, but also to expand it.

Crowdsourcing, for example, allows people with big ideas to get funding quickly and easily from anywhere in the world from people they have never met. Instead of months of investor talks, entrepreneurs can – thanks to the shop-window that is the internet – pitch directly to the world. Those with the magic touch can see the funds roll in within a matter of weeks rather than months.

Transferring money across borders, a bane of entrepreneur’s lives since time immemorial, is another area that is being reworked and reframed by innovators. TransferWise has turned the traditional (and expensive) banking solution to sending money across borders on its head and enables small firms and individuals to transfer money far cheaper than was previously possible.

The above are just a couple of the many ways in which Fintech has made it easier to do business and lower costs. Fintech firms can pass on huge savings as they are far more agile than traditional banks, not having the same overheads and commitment banks are blessed (and burdened) with. Their relative lack of size also allows them to innovate and adapt in a way bigger corporations can only dream of.

How Fintech changed the customer

The rise of the smartphone has massively changed the behaviour of consumers. Thanks to the ‘always online’ culture we live in today – and the proliferation of services and apps that feed it – people can not only access information and data they had never previously been able to, they can do so whilst waiting for a bus.

Whether it’s checking their online account or setting up an online investment portfolio, people now expect to handle financial affairs as easily and conveniently as they do their email or Facebook page. It’s a huge opportunity for businesses and soon no enterprise will succeed and flourish without the right Fintech services in place.

At iZettle, for instance, we identified that 20 million small businesses in Europe do not take accept credit or debit card payments. With the knowledge that every business that doesn’t accept card-payments misses out on sales, it should be of concern to all of us that so many of them across Europe do not. Especially given that these small businesses are in a very real sense the economic heartbeat of the continent.

We found that the primary barrier to entry into processing card payments was cost. By turning a device millions of people already owned – a mobile phone – into a point of sales system we were able to offer millions of businesses and individuals the chance to take payments just like the larger corporations they compete with. It also provides a unique insight into their customers through sophisticated analytics tools previously available only to larger businesses.

In this way, Fintech is a great leveler. Customers, however unfairly, expect the same range of services from a small firm as they do a larger one, and technology allows David to compete with Goliath on a far more even footing.

Fintech has only just got started

The rise of Fintech has opened up a world of possibilities. Businesses can offer more services than ever and for a fraction of the price of what it would have cost before.

Entrepreneurs need to view keeping up to date with Fintech developments as a vital part of their daily life. Being aware of the latest opportunities and developments within the field will only improve your business and help you stay at the forefront of your market.

Originally posted on HotTopics by Jens Munch.