Fintech are financing mechanisms that have emerged throughout history and that are currently in a more innovative and unique development thanks to the emergence of multiple Startups than in the They currently seek to capitalize to coexist in the entrepreneurship ecosystem.

Technology is found at all levels of the society in which we live, be it financial or sporting; This has allowed us to develop different areas, finding an improvement in the quality of life for all and managing to compete with the large innovation companies.

Fintech have always existed. Throughout history, technology has allowed customers to find efficient ways to develop finances and improve the quality of life for consumers.

Since 1950 we have seen how financial calculators and credit cards have given everyone the facility to distribute their income and invest it in the best possible way, through electronic payment systems, ATMs, Real Time Gross Settlement Systems, stock market, etc.

Until reaching financial technologies such as Electronic Banking or Trading among others. We have always been able to visualize how the world of finance has developed to better support businesses and other consumers.

Like Fintech, traditional banking organizations have also sought to advance in tandem with technology. They have been at the forefront of economies to provide greater benefit to customers and capitalize their income.

However, the control of these organizations over finances and the restrictions they face every day in order to finance ventures such as Startups have led this innovative sector to seek other forms of financing and reinvent itself. to survive.

Problems with the banking sector

The main function of a bank is to raise funds from customers to capitalize them and make loans and financing to other customers. Its mechanism works to generate interest on these loans and grant benefits to savers who trust and deposit their money in these banks.

This banking system does not function independently. Behind this industry are regulatory entities that verify that the operation of the banks is carried out based on the norms and laws that have been established from the central offices and from the state itself.

The number of supervisions, rigorous checks, certifications, etc., that these banks receive are given in very legal and strict forms that they must maintain at all costs. The fact of taking a wrong step is synonymous with losing said processes and generating a closure.

That is why the banking sector focuses on ensuring that its lenders have a series of legal requirements that support truthfulness and responsibility when granting loans or investments.

What happens when a Startup comes to the banking sector to ask for financing? Simple, it is not awarded. The conditions in which Startups develop are based on scenarios in which they do not even have a legal address, and in most cases their workers are not even in the same location.< /p>

That is why Startups must look for new alternatives that allow them to mobilize their income and even finance themselves without the need to comply with the number of strenuous requirements that banks must submit to their clients.

Precisely for this reason, today many banks are acquiring Fintech services and even buying these new financial technologies, because they need to get out of all these restrictions and to be able to provide its customers with a friendly system with that they can tell.

How do Fintechs solve the problem?

In recent years, Fintech has increased by 66% across latinoamerica. There are more than 1,000 financial technology ventures that have been developed in the region and that as Startups they are also, seek to emerge and sustain themselves over time.

We can segment Fintech into 11 types of market, however the main ones are: Payments and remittances , loans, business finance management, insurance, personal finance, financial education, listing in the bag, etc.

In this way, Fintech are distributed in a series of branches that allow Startups to go to them to find friendly solutions and in a short period of time. time.

The traditional way in which banks handle credits and finances prevents Startups from turning to them to benefit in a short time, their way of capitalizing is not in line with the changing movement towards that these new ventures are subjected to.

A relevant fact that we must take into account is that approximately 49% of the population in Latin America does not have access to banking or some type of banking service, however, currently more than 65% of this population owns a smartphone , which gives people greater access to unbanked financial tools.

Another curious fact is the number of people who have migrated from their country to another and do not have the possibility and the necessary documentation to acquire a bank account. These people have greater access to technology and have been able to make their purchases through payment gateways without any restrictions.

However, just as there is confidence among Startups to obtain support and financing for their development, there is also a distrust and lack of financial education of new technologies in the region, specifically due to part of the independent citizens.

This implies that consumers who do not see that a Fintech has the backing of a bank, stop trusting in the security of their transactions. What should also create a loss of confidence in the future, bringing with it the stagnation of development in the region.

Fintech must manage to provide users with the necessary security and confidence so that they can reach not only the Startups that seek their support, but also ordinary citizens who they need new financial opportunities.

The way to achieve this is by ensuring that their processes have the security tools and data privacy policies necessary to comply with the legal regulations to which they must be subject.

Legal regulations that regulate the operation of Fintech companies already exist in some countries, such as Mexico and Spain, in order to guarantee security and confidence to all users, however, as we already mentioned above, the best way to ensure these factors is through your data encryption tools.

The Startups have the best financing mechanisms to be able to carry out their venture. Since finding financing in medium zos until payment is made to their workers in different parts of the region.

Always seeking to optimize their processes and climb higher and higher on the path to success, Startups have the support of Fintech to achieve these goals and advance each again in their purposes.