Financial technology (better known as Fintech) is used to describe new tech that seeks to improve and automate the delivery and use of financial services. At its core, fintech is utilized to help companies, business owners, and consumers better manage their financial operations, processes, and lives by utilizing specialized software and algorithms that are used on computers and, increasingly, smartphones. Fintech, the word, is a combination of “financial technology.”
When fintech emerged in the 21st century, the term was initially applied to the technology employed at the back-end systems of established financial institutions. Since then, however, there has been a shift to more consumer-oriented services and therefore a more consumer-oriented definition. Fintech now includes different sectors and industries such as education, retail banking, fundraising and nonprofit, and investment management, to name a few.
Fintech also includes the development and use of cryptocurrencies, such as Bitcoin. While that segment of fintech may see the most headlines, the big money still lies in the traditional global banking industry and its multi-trillion-dollar market capitalization.
- Fintech refers to the integration of technology into offerings by financial services companies in order to improve their use and delivery to consumers.
- It primarily works by unbundling offerings by such firms and creating new markets for them.
- Startups disrupt incumbents in the finance industry by expanding financial inclusion and using technology to cut down on operational costs.
- Fintech funding is on the rise but regulatory problems exist.
- Examples of fintech applications include roboadvisors, payments apps, peer-to-peer (P2P) lending apps, investment apps, and crypto apps, among others.
- Fintech now describes a variety of financial activities, such as money transfers, depositing a check with your smartphone, bypassing a bank branch to apply for credit, raising money for a business startup, or managing your investments, generally without the assistance of a person. According to EY’s 2017 Fintech Adoption Index, one-third of consumers utilize at least two or more fintech services and those consumers are also increasingly aware of fintech as a part of their daily lives.
