The year 1991 introduced the World Wide Web to the world. Fast forward to 1994; Pizza hut was the first significant business to offer online purchasing to its customers officially. Pizza Hut’s move was regarded as an essential milestone in the history of the internet and is often considered the start of ecommerce.
The idea of Fintechs, however, had germinated long ago in the 1950s. Since then, it has come a long way, branching out in its own right through continuous evolution and innovation. Over six decades, Fintechs kept focusing on what the market wanted at each stage. Consequently, in response, they created tools and technologies to support these wants. Given the advanced nature of their operations and functions, both Fintech and e-Commerce companies have faced opposition from their respective competitors like traditional banks and brick and mortar stores.
The Fintech Revolution
With the advent of time, the traditional businesses have come to realize that it’s easier to accept and integrate technology into their daily operations to optimize their bottom line and their client base as well. Today, we see banks leveraging tools and software powered by Fintech to streamline their underwriting, and loan origination processes. Similarly, even brick and mortar stores have started embracing e-commerce culture to reach out to more customers and overcome geographic barriers they face. Fintechs have had a significant impact on e-commerce ecosystems. In this article, we discuss the impact of Fintech on today’s e-Commerce sector:
Financial Inclusion
The success of e-commerce as an industry depends on the synchronicity with which buyers and sellers behave. There is a need to achieve an equilibrium between supply and demand.
Numerous aspiring businesses aim to make it big in the world of e-Commerce but lack access to the right kind of financial assistance required to set up a business, buy inventory, etc. Traditional banks hesitate from sanctioning loans to start-ups or SMEs due to lack of credit scores. However, Fintechs efficiently raise loans for SMEs or individuals with no credit history with tech that supports alternative data for decision making. AI and ML backed technology that Fintechs use can easily customize the loan terms and conditions on the base of the needs of applicants. The streamlined approach of loan origination that Fintechs follow, allow small businesses to grow faster and expand further.
Similarly, the Fintech infrastructure also reaches out to the unbanked chunk of the population who are aloof from the benefits of eCommerce. Facilities like quick mobile payments and digital wallets have made it easier for everyone to do online banking. With their innovative tools and payment platforms, they make it convenient for everyone to make online transactions and thus participate in eCommerce growth.
Thus, Fintechs played a steady role in financial inclusion by bringing together sellers and consumers to build a strong foundation for the global eCommerce platform.
Trust Building
There prevailed a general sense of skepticism around online transactions initially. Users failed to understand how something as tangible as money can be transferred through an online ecosystem. However, over time, digital payment avenues with efficient marketing have built trust among consumers. Now, a large chunk of the population relies on online payment platforms for transacting online. The secure avenues that Fintechs provide secure channels that fortify the trust of users in online transactions. Customers enjoy the convenience of conducting operations anywhere and anytime thanks to superior technologies that Fintechs provide.
Beyond Geographic Boundaries
Fintech has empowered the global e-Commerce marketplace phenomenally. A consumer can buy any merchandise or service from any part of the world and pay for it while sitting in the comfort of his home, without any geographical barriers whatsoever. The emergence of secure payment platforms and digital wallets have completely revolutionized payment processes allowing e-commerce to thrive globally. Thanks to Fintechs, e-Commerce vendors can offer services like options for advance payments and refunds to their customers, even to the ones sitting across the globe from them.
Data Analytics
Fintechs seamlessly collect information about multiple users through numerous apps and services to help their e-commerce partners. Using superior and proven analytical capabilities like AI algorithms and ML technology, Fintechs can quickly identify buying patterns of consumers. Such insightful data can be used to drive marketing campaigns for e-commerce firms. Data from analytics can be used to direct targeted ads towards customers, based on their previous purchase patterns. Data analytic capabilities of Fintechs can boost sales for e-commerce platforms that leverage them. Fintechs are rich data resources with analytical abilities that allow third party e-Commerce vendors to benefit from these consumer insights and provide better results.
Conclusion
The financial services industry and e-commerce businesses are a far cry from being customer-friendly, inherently. However, with the advent of Fintechs, these businesses are enhancing their customer-friendliness. Given the numerous advancements that Fintechs bring along, companies find an opportunity to fill in the wide gap for improvement of customer service. So much so that any e-commerce business that doesn’t use Fintech apps and tools faces losses in terms of customer service and satisfaction.
Gradually, markets have seen changes in customer expectations, as well. Modern customers prioritize accessibility, convenience, customized products along with other innovative solutions. While customer retention and engagement remain the most significant challenge that most e-commerce businesses face, use of innovative tools by Fintechs to reach out and connect with the customer can quickly increase their customer base. Given the intense competition for market share in the e-commerce sector, businesses need to leverage several technological solutions to engage customers and identify areas that are perfect for growth. Fintechs offer innovative and inspiring solutions for companies that add value to their customers.
About Finezza
Finezza is a software tool that helps lending businesses with their efficient management practices. It comes with the intelligence of data analytics and helps with profitable decision making that mimics the way a loan officer proceeds through an application assessment. It digitizes the application process for the benefit of the borrower and allows seamless origination to benefit the lender. Moreover, it ensures full regulatory compliance with government policies as applicable.
[…] Traditional banks did enjoy a monopoly in financial markets for the longest time as they boasted of licenses and regulations to back them up. With the advent of globalisation, banking in itself has undergone a tremendous revolution of sorts. Today, there is an intense global competition, large markets to serve and the popularity of technical innovations to improve processes. One of the severe aftermaths of globalisation was an intense competition that surfaced between different players in the financial markets. For example, Indian commercial entities felt the need to introduce high-end services, curate superior customer experiences and offer privileges or concessions to attract and retain their customers. […]