Fintech is an umbrella term that encompasses the innovative ways technology is used to deliver and transform financial services.

From banking to payments to lending, fintech companies are increasingly attempting to compete with banks that have been around far longer and that arguably have far more money than they do. So in several ways, fintech is disrupting the way businesses are run and managed in today's tech world. Here are five ways fintechs are making the disruption a reality.

Encouraging online cashless transaction

With the increased penetration of the Internet, more and more people in Nigeria are changing their preferred mode of shopping from brick-and-mortar to online. These customers are also better-informed about scams and frauds, and are, therefore, seeking reliable, verifiable platforms to pay for their online purchases.

Biometrics for stronger security

There is a lot of interest in finding ways to use biometrics thumbprints and facial recognition to add an extra layer of authentication for transactions. Biometrics promotes usability by enabling quick authentication, avoiding the frustration that comes with remembering multiple passwords. In fact, several fintechs are investing in biometrics-based authentication solutions that use the forward-facing camera to scan the iris or the in-built thumbprint scanners in smartphones to strengthen security.

Targeting underserved markets

Even the largest financial institutions have left unfilled gaps in the markets they serve. Underserved markets are often seen as being too small or risky to be worthwhile. That has created the opportunity for forward-thinking fintechs, many of which not only hope to build a business serving these underserved markets but to leverage them expand their reach and market share.

Creating better and innovative services

Fintech startups often have the opportunity to create better products and services than their entrenched competitors. After all, what might be for a large financial institution a relatively small part of its business could be the entire focus of a fintech startup. That allows the latter to focus on building a better mousetrap and in turn win customers over.