How FinTech can help users’ financial health

The benefits of fintech for the user may be different depending on the financial product offered by each specific company. But, in addition to the specific benefits of each product, there are some advantages that occur in all fintech-related companies.

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What are FinTech and its impact on financial health?

Fintechs can help the financial health of users by offering products that are advantageous, highly profitable and understandable to all.

The term fintech refers to startups in the technology sector that take advantage of the latest new technologies to create and offer innovative financial services.

Benefits of fintech for the user

  • Savings. The possibility of doing business in a faster and more automated way improves business efficiency, which translates into economic and time savings. This double saving can be a great advantage for the company, since it can increase the benefits derived from its investments. 

  • Flexibility. This is the most characteristic advantage of fintech companies because they work with new technologies that allow them to carry out different operations, use alternative financing, and all of this at any time and place.

  • Transparency. The transactions carried out through the technology used by fintech companies are fast and transparent, which is another fundamental characteristic of our products.

  • Efficiency. The financial technology we use makes us more efficient. Automation offers specialization through specific services, a high level of efficiency and quality of services, as well as a quick and agile response.

Yield and return in finance products

Yield is the overall change in the value of an investment, provided that the owner of a fund reinvests dividends and earnings. On the other hand, yield refers to investment income and gains and is the measure of income rather than capital gains.

In other words, yield is the return earned on an investment, measured as a percentage of the capital invested, while return refers to the profits that have been earned or are expected to be earned on an investment made. 

In general terms, yield and return are two concepts with similar meanings. The main difference lies in the fact that profitability is an exclusively economic term and return is a broader concept. 

Fintechs, due to the use of technologies and innovative products that our clients can access, can offer a high yield and profitability compared to other similar financial products. Investments made in fintechs give very high returns compared to the investment that needs to be made.

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Financial education: key to financial health through FinTech

For financial education and financial health to exist, there must first be financial inclusion. This means having access to financial products that are useful, affordable and meet the investor’s needs, provided in a responsible and sustainable manner. These can include credit and insurance. 

The importance of financial education

But financial inclusion is not enough without financial education that allows people accessing these products and services that are available in the market to understand them clearly. In this way, contracting some of these products and services will be an advantage for clients and not a problem due to a lack of understanding of their conditions. Financial education aims to help people develop financial competencies and capabilities so that citizens can make informed and responsible decisions regarding financial products.

Measurement of financial health

Through financial inclusion and education, users will be able to access financial products and services with knowledge and information, which will enable them to develop good financial health and a good relationship with money and the opportunities offered by the financial system. 

Financial health is defined as the ability of an individual to meet their financial obligations on time, to have control over his or her financial situation and sufficient solvency to make the right decisions so that they can plan for the future with peace of mind. 

To know if a person or company has adequate finances and how to measure financial health, these are the main financial health insights used: 

  • Spending less than you earn.
  • Paying bills in full and on time.
  • Having savings in liquid financial products. 
  • Sustainable debt level. 
  • Healthy credit history.
  • Adequate insurance.
  • Spending plan for the future.  

Therefore, in order to know how to have a good financial health, it is necessary to analyze if the above mentioned points are met. 

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Fintechs are companies that use new technologies to offer financial products with great advantages, such as flexibility, transparency, efficiency and savings. Yield and profitability, the former understood as the percentage obtained according to the capital invested and the latter as the income received, are high in this type of products. In addition, having inclusion and education in this area makes it easier to achieve financial health.

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