Fintech, which combines the words “financial” and technology,” is a relatively new and rather imprecise term. That refers to any emerging technology that allows consumers or financial institutions to provide financial services in newer, faster ways than before. Consider the difference between strolling into a bank and being able to check your amount in real-time on your phone.
Financial services have evolved to cover anything from the ability for consumers to examine their financial transactions online to apps that allow you to pay buddies to tools that assist financial institutions in making speedy lending decisions. FinTech in action also includes the ability for investors to conduct real-time research, pick firms, and monitor the performance of their portfolios.
FinTech is allowing people to take control of their finances, resulting in significantly more financial knowledge than was previously accessible. Traditional silos are being shattered by the use of modern technology, which is supporting people in improving their financial condition and outcomes.
Personal Capital, Lending Club, Kabbage, and Wealthfront are examples of well-known FinTech companies that have developed in the last decade, offering fresh twists on financial principles and allowing individuals to have greater control over their financial results.
- Mobile Banking: Several financial institutions are developing or increasing their mobile banking capabilities in response to rising consumer demand for digital banking. Most banks now have some type of mobile banking feature on their platforms.
- Credit and Lending in the Digital World: Small business loans are provided directly by a FinTech juggernaut, which leverages transactional data to make lightning-fast lending decisions. Lending Club is a peer-to-peer lending platform that allows members to lend money to one another for business initiatives without the need for a traditional banking institution. Each of these advancements has been made possible by the use of Big Data and advanced analytics across digital platforms.
In the expanding credit reporting sector, Credit Karma is an example of a FinTech that provides a service (free credit reports) in exchange. For the option to market loans and credit cards to the individual needs of its customers.
- Blockchain & Cryptocurrency: Users who want to acquire or sell cryptocurrencies like bitcoin can do so through cryptocurrency exchanges. Blockchain solutions have attempted to avoid fraud by keeping provenance data on the blockchain.
- Payments via mobile phone: If you ask a person under the age of 30 how they prefer to pay, they’ll almost probably say smartphone apps. As we’ve progressed from a cash-based culture to one that is increasingly digital. Traditional payment systems have been replaced by peer-to-peer platforms such as Venmo. In reality, mobile point-of-sale transactions are expected to reach $5.4 billion globally in 2018.
- Trading: Trading and investing have benefited from the arrival of FinTech. Without the aid of AI technologies, big data information is frequently unorganized and illegible. These technologies can sift through large information and derive insights from data in seconds using natural language processing. Traders may now use algorithms to analyze vast volumes of data and discover patterns and risks.
- Insurance: Insurtech is the application of technology to the insurance sector to maximize savings and efficiency. Insurtechs are revolutionizing the insurance consumer experience by streamlining time-consuming operations including underwriting, claims processing, and instant activation. FinTech firms are making deals with traditional insurance firms to automate operations and enable insurers to increase coverage.
The FinTech Industry’s Importance
FinTech’s success is owed in large part to the chance it provides small businesses to compete on an equal basis with traditional banks and financial institutions. Thanks to FinTech, it’s no longer about who’s the biggest. But who’s the fastest and most responsive when it comes to effectively satisfying ever-changing consumer needs. Furthermore, the solutions provided by FinTech companies are no longer “one size fits all.” Instead, they offer specialized – and often niche – financial services that meet a specific financial need for a fraction of the cost of typical financial services.
So, FinTech companies that continue to innovate in delivering new answers to old challenges will flourish. Lastly, consumers become more smart and connected.