Financial technology, or fin-tech for short, is an area we’ve touched upon repeatedly at Red Door Capital Group. Fin-tech continues to transform small businesses by offering cost-efficient solutions. This emerging trend has helped more small businesses go lean at a time where cost control is even more critical for success.

A New Breed of Business

At its core, fin-tech is built on “the passion and ingenuity of Silicon Valley, with the financial savvy and banking focus of Wall Street,” according to Ryan Landers of Business.com. Although its hard to find two sources that agree on a comprehensive definition of fin-tech, they all follow the basic idea of leveraging technology to disrupt traditional financial services.

From a small business perspective, fin-tech has profound implications on payment processing, automation, cryptocurrency and insurance.

To learn more about the value proposition of financial technology, read: Fin-Tech Business Services: 5 Reasons Small Business Owners Need to Consider Financial Technology.  Also feel free to bookmark the Red Door Capital Blog or sign up to our mailing list for all the latest updates.

Payment Processing

If you’re an entrepreneur or small business owner, fin-tech solutions can transform how you collect and receive payments. Certainly, payment services were one of the biggest fin-tech trends of 2016, with enormous startup funding pouring into companies that are transforming the payments arena.

Square, an innovative mobile payment provider, is one of the most widely recognized fin-tech companies on the market. Square allows small businesses to accept credit card payments through an innovative smartphone card swiper.

Stripe is another mobile payment processor that has officially partnered with Apple Pay. The service offers app-based checkout systems, giving businesses more ways to process and accept payments.

Payfirma is a well-known payment processor that became the first company to integrate mobile smartphone technology. Today, the company provides integrated hardware and software services needed to accept payments online, in store or in the field.

If accepting mobile payments is on your radar, these three companies are a good starting point.

Are you considering automation? Check out Red Door Capital’s merchant services to learn about the various ways we can help you maximize your payment processing. Also, be sure to check out Small Business Solutions: How to Ensure Your Business Gets Paid on Time.

Automation

According to Forbes, fin-tech automation is changing the face of business. Automation reduces human effort in repetitive tasks, making work easier and less complicated. By automating back-end functions, accounts receivable and other repetitve business activities, employees can spend their energy on more valuable work. Cost savings and increased business efficiency are the two biggest benefits associated with automation.

From a fin-tech perspective, companies like YayPay are changing the way businesses manage cash flow and accounts receivable.

For investors, automation also offers the opportunity to make better trades in the financial markets. So-called “robo advisors” use machine learning algorithms and big data to help investors make informed investment decisions. Ninja Trader and Betterment are two notable examples of automated investment services.

Are you in the market for more efficient cash flow solutions? Check out Red Door Capital’s funding solutions.

If you’re interested in taking automation to the next level, read: Ten Ways to Automate Your Small Business for Maximum Efficiency.

Cryptocurrency

Cryptocurrency, a digital currency that relies on encryption to regulate and transfer funds, is one of the hottest trends in the fin-tech industry. Bitcoin is the most recognizable cryptocurrency in the market today. With a market capitalization of more than $20 billion, Bitcoin proves that cryptocurrency is more than just a fad, but a legitimate investment and payment vehicle.

If you’re an online merchant, there’s a pretty good chance cryptocurrency will be part of your future. Already today, more than 100,000 merchants accept Bitcoin as a form of payment. This figure is expected to rise as more consumers realize the benefits of digital currency.

Investors interested in cryptocurrency might want to check out Coinbase, the “PayPal of Bitcoin.” Remember: accepting Bitcoin is one thing and trading it on the open market is another. Bitcoin is still a highly volatile digital coin, so should investors should use extra caution when entering this market.

Insurance

Fin-tech is also making strong inroads into insurance services, leading to widespread growth in so-called “insure-tech” companies. Some insure-tech companies, like Lemonade, are licensed to underwrite and issue their own polices. Other insure-techs simply work to optimize the operations of traditional insurance providers.

If you’re a small business owner, insure-tech services can be a great source of cost savings for all your insurance needs. Like other segments of the financial industry, insure-tech is helping both consumers and businesses save money.

The Future of Fin-Tech

So, what does the future hold for fin-tech? If recent trends are any indication, the emphasis on faster, more convenient services will continue to drive the market forward. Reducing friction in financial transactions, increasing payment methods and integrating automated solutions will likely provide a strong value proposition for small businesses in the near term. With billions of dollars pouring into fin-tech startups, business owners can expect wide scale innovation in this space for many years to come.

 

At Red Door Capital, we’re all about helping entrepreneurs and small business owners overcome financial barriers. Fin-tech is just one way you can streamline your business and lower costs. If you’re looking to access financing, manage your cash flow cycle or begin marketing your products and services, check out: The Most Common Financial Barriers Facing Entrepreneurs.

Sources

Anthony Cuthbertson (February 4, 2015). “Bitcoin now accepted by 100,000 merchants worldwide.” International Business Times.

Nikolai Kuznetsov (October 13, 2016). “How FinTech Automation is Changing The Face of Business & Finance.” Forbes.

Ryan Landers (February 22, 2017). “How FinTech Is Changing Business (and Bank Accounts). Business.com.

Andrew Meola (December 14, 2016). “THE FINTECH REPORT 2016: Financial industry trends and investment. Business Insider.