Fintech (financial technology) is an umbrella word comprising software, mobile apps, and other technologies designed to enhance and automate traditional finance forms for corporations and individuals. Fintech may range from simple mobile payment apps to large blockchain networks containing encrypted transactions. Here’s everything you need to know about FinTech.
Evolution of Fintech
Fintech has been around for much longer than most people realize. While the most recent incarnation of Fintech allows you to pay for coffee using a smartphone app, Fintech can be traced back to the first credit cards widely used by the general public in the late 1950s, or about 70 years ago, according to U.S. News and World Report. Following the introduction of the credit card, financial technology advanced and brought numerous key milestones to the general market, including ATMs and online stock exchanges. Each new piece of technology improves the financial services that most people use daily but is seldom thought about. Today, as more services move to a new technology paradigm, such as using a mobile wallet instead of real credit cards, Fintech solutions are disrupting the existing financial infrastructure.
The Workings of Fintech
Fintech makes financial services and transactions easier and cheaper for individuals and businesses. It can also refer to businesses and services that use artificial intelligence, big data, and blockchain technology to conduct highly secure transactions within an internal network. Fintech attempts to simplify the transaction process by removing potentially superfluous stages for all parties involved. For example, a smartphone app such as Venmo or CashApp lets you pay others anytime by sending dollars directly to their bank account. If you paid with a check or cash, the receiver would need to go to the bank to deposit the funds.
Examples of Fintech
There are many common examples of financial technology applications today. Here are some popular ones.
Mobile Wallets
Mobile wallets and payment applications are two of the most common types of Fintech. Popular examples such as PayPal, Venmo, Apple Pay, and Google Pay enable peers to send money to one another and enable retailers to accept client payments.
Crowdfunding Platforms
Crowdfunding sites like Kickstarter and GoFundMe have challenged traditional financing sources by allowing consumers to invest in businesses, goods, and individuals.
Stock Trading Apps
Stock trading applications like Robinhood and Acorns have become well-known and creative examples of Fintech. Instead of visiting a stockbroker, investors may trade stocks from anywhere using their mobile devices.
As technology improves in the 21st fincentury with advances in data usage and artificial intelligence, the future possibilities for Fintech are exciting. Financial services will become easier to access and use as they become better tailored for everyday use.