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Investing is no easy feat. Identifying effective ways of building wealth takes time and effort, especially if investment decisions are made for larger entities. Clear comprehension of financial goals, market volatility, risk tolerance and industry trends are just a few notable aspects to consider; a significant element also revolves around discerning key industries set for long-term growth.
A standout buzzword in this regard has been fintech, technologies designed to enhance and automate the use of financial transactions. Over recent years, its growth has shown no signs of slowing down anytime soon. According to a report by KPMG, global venture capital investment in fintech reached a record US$115 billion in 2021, exceeding the previous high of $53.2 billion in 2018.
Fintech has revolutionized the world’s business, from mobile banking to cryptocurrency, but its impact has not been restricted to the financial industry. Among other sectors, it is starting to have a sizeable influence on healthcare, making healthcare fintech an ideal investment choice. But why is this a sound decision to pursue? Here are four of my reasons:
1. Healthcare services are an ever-present need Investing in an area that aligns with the global population’s evolution and needs makes total sense. Humankind must take care of themselves physically and mentally to be productive and to contribute to the economy. As seen from the COVID-19 pandemic, healthcare is a priority in any country. Therefore, it presents a lasting need that derives demand for ancillary services, including technology that enhances its effectiveness and accessibility. In short, if there are enough people on the planet, there will be a need for healthcare services and financial technology that supports it. Hence it becomes a long-term investment opportunity.
2. Improving healthcare accessibility and affordability According to a joint report by the World Bank and World Health Organization, more than half a billion people were pushed or further pushed into extreme poverty because they had to pay for health services out of their pockets, and the pandemic has worsened this. Fintech is slowly solving these issues by simplifying complex patient transactions in various ways, ranging from artificial intelligence-assisted advice on health savings, to innovative apps that consolidate health expenses. Fintech is also promoting financial inclusion through affordable buy-now-pay-later schemes and personalized loans for relatively poor individuals, thereby assisting them in receiving essential care. By utilizing financial technology to provide timely assistance, educate consumers on beneficial healthcare spending habits, and empower confidence in technology, many fintech companies are tapping into underserved markets such as low-income households. This presents new markets to explore with high growth potential, and, consequently, new investment opportunities as time progresses.
3. Environmental and social impact With the rise in responsible consumption over the years, fintech companies are largely positively viewed in terms of their environment and social elements. In addition to improving financial and social inclusion in healthcare, fintech developments are paving the way for a greener and healthier future. Digitized healthcare payment solutions increase efficiency and significantly decrease paperwork. Moreover, they emphasize using modern information and communication technology (ICT) systems to complete remote transactions, reducing the need to travel, and physically contribute to greenhouse gas emissions. Fintech firms are also exploring platforms that reward consumers for following healthy habits with digital currencies or discounts from partner brands, thus influencing healthy lifestyles. These aspects enable fintech firms to improve the sustainability of the healthcare sector by guiding other firms and individuals to adapt accordingly, thereby enhancing its investment attractiveness from an environmental, social, and governance (ESG) perspective.
4. Fintech supports the financial stability of healthcare providers By creating value through automation and artificial intelligence-driven solutions, fintech firms are helping healthcare providers optimize the recording of the entire patient journey, and translate them into accurate claims that are more likely to be reimbursed. This crucial role in developing revenue cycle management software helps prevent revenue leakages as well as avoid human errors in various processes such as administration, documentation, medical coding, and claim submission. It also helps improve service provision to patients as it frees up time that medical staff would otherwise spend on recording data. Ultimately, this results in more revenue for healthcare providers to reinvest and better quality of care- critical factors for improving a country’s productive potential, which can also attract government support and incentives for further enhancement. Fintech developments in this area have rapidly grown since the pandemic, signifying its potential for advancing resilience and organized efficiency in healthcare industries across the globe. According to a study by Grand View Research, the global revenue cycle management market size was valued at $243.1 billion in 2021, and it is projected to expand at a compound annual growth rate (CAGR) of 11.6% from 2022 to 2030.
Go to Publisher: Entrepreneur: Latest Venture Capital Articles
Author: Dr. Ayham Refaat