What is Financial Technology – Fintech?
Financial technology (Fintech) is used to describe a new technology aimed at improving and automating the delivery and use of financial services. Fintech is also being used to help businesses, entrepreneurs and consumers better manage their financial activities, processes, and lives through specialized software and algorithms that are increasingly used on computers and increasingly on smartphones.
When fintech emerged in the 21st century, the term was first applied to the technology used in the back-end systems of established financial institutions. Since then, however, there has been a shift towards a more consumer-oriented service and thus a more consumer-oriented definition. Fintech now covers more industries and sectors such as education, retail banking, fundraising and non-profits, and investment management, just to name a few.
This fintech segment is expected to receive more news, but the money is still in the traditional global banking sector and the market value is billions of dollars.
In general, the term “financial technology” can be applied to any innovation in the way people do business, from the invention of digital money to double-entry bookkeeping. Since the internet and mobile/smartphone internet revolution, financial technology has exploded and fintech, originally referring to the information technology used in bank branches or commercial enterprises, now describes a wide range of technological interventions in human resources and commercial finance.
Fintech now describes a variety of financial activities such as transferring money, bypassing a bank to apply for credit, raising funds to start a business, or investing in wealth management, often without assistance. . According to EY’s 2017 FinTech Adoption Index, a third of consumers use at least two or more fintech services, and these consumers are also increasingly aware of fintech as part of their daily lives.
Fintech in practice
The most talked-about (and most funded) fintech startups share the same trait: they are designed to threaten, challenge, and ultimately convince traditional financial services firms founded by more mobile, a disadvantaged segment, or faster and/or deliver improvements to deliver. Maintenance.
For example, Affirm wants to remove credit card companies from the online shopping process and provide consumers with a way to get short-term loans for purchases. While the costs can be high, Afferma says it offers consumers with little or no credit a way to get credit and build their credit history.
Likewise, Better Mortgage seeks to simplify the home loan process (and avoid traditional mortgage brokers) with a digital offering that can reward users with a verified pre-authorization letter within 24 hours of applying. GreenSky wants to connect pension providers with banks to help consumers avoid creditors and save interest by not offering terms.
For consumers with or without credit, Tala provides microcredit to consumers in developing countries through an in-depth smartphone search for transaction history and seemingly unrelated things like the mobile games they play. Tala’s goal is to provide these consumers with better options than local banks, unregulated lenders, and other microfinance institutions.
Broaden the horizons of Fintech
Until now, financial service providers offered several services under one umbrella. The scope of these services includes a wide range of traditional trading and mortgage services. In its most basic form, Fintech breaks these services down into individual offerings. By combining simplified offerings with technology, fintech companies can operate more efficiently and reduce the cost of each transaction.
If one word can describe the impact of fintech innovations on traditional commercial, banking, advisory and financial products, it’s a breath of fresh air as financial products and services once the domain of agencies, retailers, and desktops have shifted to mobile. devices. or just democratize. deep. away from the institution.