Fintechs Peer 2 Peer
Concept, history and impact of the most innovative companies in the world
There are still bureaucracies that guide financial market processes. A number of requirements and processes are carried out to execute transactions, which can result in cumbersome and costly structures. Most of the time, this results in a higher credit cost to the borrower. There are several situations in which this high credit cost creates fear, as its total effective cost may be significantly higher than its value.
Additionally, traditional financial agencies tend to use language and communication that is difficult to understand, adding to the borrower's fear. It's traits like these that they created a favorable scenario for Fintechs: startups focused on the financial sector, which grow through a model that tries to be simple, intuitive and agile. Initially, Fintechs came up with innovative solutions for demands that already existed but were not always resolved. Here is the main difference between physical and digital banks: the technological intervention.
The secret behind the success of Fintechs
The digital formalization of operations has always been a trend and, in the financial market, this could not have been better. A physical financial organization follows a revenue that includes all activity costs, expenses, and profitability. Inevitably, an ecosystem of this type can reflect on the customer's final price. In addition, it is interesting to observe the routine of these institutions. In order to keep up with the exponential rise of technology - in processes previously only processed in person - banks began to offer various functionalities, without the real preparation and willingness of the team: this interferes with the quality provided to each service. This, however, is not the case with Fintechs. Digital, modern and assertive, they are equipped with an agile ecosystem and supported by state-of-the-art software. With a revolutionary ideology, many of them emerge with the discourse of a new era, in which it promises to reformulate the way in which citizens relate to their own money and business. Fintechs are able to provide various services for a minimum price (or, often, free), since they do not follow a strict line of expenses. Its decentralized format, without a physical network distributed around the world, guarantees flexibility. Another detail is that each Fintech specializes in a specific segment of the financial sector. This is also a differential between physical institutions: offering only one front, Fintech has doubled the potential to act impeccably in this particular issue. An example of this is precisely the credit fintechs - the bank has the same function, but it is only one in the midst of several others; in addition to the increased bureaucracy, there is a greater incidence of error and user dissatisfaction.
What do Fintechs offer?
One of the most striking features of Fintechs is their low costs. Before, some functionalities and benefits were already requested and a prejudice even emerged surrounding banks and their tiny asterisks at the bottom of contracts. Fintechs, in turn, act with extremely transparent communication, point out the pros and cons of certain processes, and offer their services in the way they were requested (and not so long ago). Check out the most popular ones:
Checking account without a fee
While it may seem simple, anyone who was minimally familiar with traditional banks a few years ago knows that this was a difficult option to find. Nowadays, it's already routine.
User autonomy
It is a quality to consider, since in banking institutions, the user gains partial - or none - autonomy under their own procedures.
Card without annual fee
Even today, many cards offered charge fees, although institutions try to leave them at minimum amounts to compete with the free Fintechs.
Credit loans with very low interest rates
The flexibility of Fintechs when it comes to payment options is endless. Currently, several credit Fintechs define lending as a type of democratization of resources. Next, let's talk more about this:
Portfolio diversification: what is Peer 2 Peer?
There are several types of Fintechs and this is something that needs to be clear. In Brazil alone, there are more than 800 Fintechs, 20% of which are credit Fintechs. There is a relationship between Startup and Fintech that can be defined as stages: a Startup is an early-stage technology company. From the moment it adopts the financial market as its main front, it falls under the Fintech nomenclature. If you want to understand more about the nature of startups, we have the right post for you: Examples of Brazilian startups that changed the market.Regulated in 2018 by the Central Bank, credit fintechs follow the line of reasoning of financial inclusion. The term “Peer 2 Peer”, in its literal translation, can be interpreted as “from person to person”. Some people also know it as “Peer to Peer Lending”, which can be defined as “partner-to-partner lending”. In other words, it is a very flexible way of bringing together two agents with interests that add to each other. In this scenario, credit Fintechs act as an intermediary between both sides. People who want to invest in assets, whether large or small, can choose the amount that is most convenient; as with loans to entrepreneurs without many resources, or even an individual. Thus, the investor does not need to have large capital, nor does the company need to become a hostage of significant interest. It is a portfolio diversification that occurs in a 100% digital, secure and simple way, extremely accessible and inclusive.
The regulation of P2P Fintechs
To be considered a P2P credit Fintech, it is necessary to register with the Peoples Loan Society (SEP), ensuring the regularity and security of this company. In addition, the act of regulating these Fintechs is a way to stimulate national working capital with the emergence of new companies and businesses. On the other hand, investors increase their profitability and diversify their portfolio with a very low risk margin. In addition, to be sure that a Fintech actually exists and is supervised by the BC (Central Bank of Brazil), there is a query in which you can search by company name.
This is the future of the financial market
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