Financial Technology (Fintech)

“There are more financial products for more consumers than you could ever imagine.” Fintech Startup Founder

Fintech, or financial technology, refers to the technological innovation in the design and delivery of financial services and products. The term can apply to any innovation in how companies and people transact business, from the invention of digital money to double-entry bookkeeping. The technology in finance continues to evolve; advancements include the use of Big Data, artificial intelligence (AI), and machine learning to evaluate investment opportunities, optimize portfolios, and mitigate risks.

Fintech refers to any business that uses technology to enhance or automate financial services and processes. The term encompasses a rapidly growing industry that serves the interests of both consumers and businesses in multiple ways. From mobile banking and insurance to cryptocurrency and investment apps, fintech has a seemingly endless array of applications.

Fueled by venture capital and changes brought by the pandemic, fintech is coming for your wallet like never before https://t.co/iFxVUzDEEL via @BW

— Bloomberg (@business) October 10, 2021

There are 326 Fintechs, according to one database, from one-stop shops such as PayPal Holdings Inc. and Revolut Ltd. to behind-the-scenes payment processors.

Fintech companies integrate technologies (like AI, blockchain and data science) into traditional financial sectors to make them safer, faster and more efficient. Fintech is one of the fastest-growing tech sectors, with companies innovating in almost every area of finance; from payments and loans to credit scoring and stock trading.

“Fintech’s disruptive potential was unleashed in mature markets such as the U.S. only recently, thanks to a confluence of factors: low interest rates, better technology, rising consumer demand, and a more permissive attitude toward nonbank finance”, according to Lionel Laurent, a Bloomberg Opinion Columnist. “Efficiency gains in software have kept products coming.”

Fintech technology examples include:

Crowdfunding Platforms – Crowdfunding platforms allow internet and app users to send or receive money from others on the platform and have allowed individuals or businesses to pool funding from a variety of sources all in the same place. Instead of having to go to a traditional bank for a loan, it is now possible to go straight to investors for support of a project or company.
Blockchain and Cryptocurrency – Cryptocurrency and blockchain are hallmark examples of fintech in action. Cryptocurrency exchanges connect users to buying or selling cryptocurrencies like bitcoin or litecoin. But in addition to crypto, blockchain help reduce fraud by keeping provenance data on the blockchain. And while cryptocurrency and even blockchain have certainly taken parts of the investment world by storm in recent years.
Mobile Payments – It seems as though everyone with a smartphone uses some form of mobile payments. In fact, according to Statista data, the global mobile payment market is on track to surpass $1 trillion in 2019. Using increasingly sophisticated technology, services have emerged that allow consumers to exchange money and payments online or on mobile devices – including popular payment app Venmo.
Insurance – Fintech has even disrupted the insurance industry. In fact, insurtech (as it’s been so-called) has come to include everything from car insurance to home insurance and data protection. Additionally, insurtech startups are increasingly attracting funding.
Robo-Advising and Stock-Trading Apps – Robo-advising has disrupted the asset management sector by providing algorithm-based asset recommendations and portfolio management that have increased efficiency and lowered costs. Since the rise of more advanced technology that can analyze various portfolio options 24/7, financial institutions have adapted to offer online robo-advising services. Perhaps one of the more popular and big innovations in the fintech space has been the development of stock-trading apps. When once investors had to go directly to a stock exchange like the NYSE or Nasdaq, now, investors can buy and sell stocks at the tap of a finger on their mobile device. And with inexpensive and low-minimum apps, investing from anywhere with any budget has never been easier.
Budgeting Apps – One of the most common uses of fintech is budgeting apps for consumers, which have grown exponentially in popularity over the years. Before, consumers had to create their own budgets, gather checks, or navigate excel spreadsheets to keep track of their finances. But after the fintech revolution prompted the development of financial services apps, consumers can easily and efficiently keep track of their income, expenses and other budgeting tools that have revolutionized the way consumers think about their money. Budgeting apps help consumers track their income, monthly payments, expenditures and more – all on their mobile device.

With fintech innovations, firms can better meet customer needs and expectations. With clear benefits, fintech is quickly changing the landscape of investment management. Advancements include the use of robo-advisers, Big Data, AI, and machine learning to evaluate investment opportunities, optimize portfolios, and mitigate risks. In the area of financial recordkeeping, blockchain and distributed ledger technology are creating new ways to record, track, and store transactions for financial assets.

Additionally, artificial intelligence (AI) is having a major impact on the finance industry as part of fintech. AI is being used to analyze investment opportunities, optimize portfolios, and mitigate risks, among many other functions, but the applications go well beyond the investment decision-making process. For example, automated wealth advisers (or “robo-advisers”) may assist investors without the need for a human adviser, or they may be used in combination with a human adviser. The desired outcome is the ability to provide tailored, actionable advice to investors with greater ease of access and at lower cost.

The annual Forbes Fintech 50 compiles some of the hottest fintech platforms on the market worth noting.

Fintech is changing the landscape of financial and investment management. At its core, Fintech exist to help companies, business owners and consumers better manage their finances, processes, and lives by utilizing specialized technology, software and algorithms.

References:

From Gratitude to Greatness: Brownlee Global's Path to a Purposeful Life

Guide and Educate Individuals How to Build Long-Term Wealth, Better Manage Their Money, and Achieve Financial Freedom

Like this:

Related