Fintech: Everything To Know About The Fastest-Growing Industry

Dhir Acharya - Sep 10, 2020


Fintech: Everything To Know About The Fastest-Growing Industry

Fintech: this post explains the definition, applications of financial technology, and provides information around the fastest-growing industry in the world.

Fintech is a term combining finance and technology, fintech meaning refers to a business using technology to automate or enhance financial processes and services. The term is now widely used and this industry is growing fast to serve not only businesses but also consumers. However, if you are not familiar with this term, this post will tell you everything you need to know about financial technology.

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What is financial technology?

How fintech works

In fact, fintech is not as new as you may think as technology has always been a part of the financial world, such as the introduction of ATMs, credit cards, finance apps, and electronic trading floors.

Each project, each app has a different use of financial technology. But some of the newest advances are using blockchain, data science, and machine learning algorithms to handle everything from processing credit risks to running hedge funds.

Who uses fintech

Before getting to who uses financial technology, you need to know its applications in the real world.

Banking

Mobile banking has become a large part of the financial technology industry. In terms of personal finance, consumers are having a greater demand for easy digital access to bank accounts from a mobile device. These days, most banks offer a mobile banking feature, especially when neobanks are rising.

A neobank doesn’t have physical branch locations, it serves customers with payment, savings, and checking services and loans only on mobile and digital platforms. Varo, Simple, and Chime are some of the existing neobanks.

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Cryptocurrency and blockchain are among the most popular uses of financial technology

Cryptocurrency and blockchain

Along with fintech, we have also witnessed the birth of blockchain and cryptocurrency. Crypto exchanges such as Coinbase matching sellers with buyers of Altcoins and Bitcoin.

Cryptocurrency and blockchain are two examples of financial technology outside of traditional banking.

Investment and savings

In recent years, there have been a lot more investing and savings apps due to the appearance of financial technology. And fintech companies like Acorns, Stash, and Robinhood have broken the barriers to investing. In spite of their different approaches, they offer a combination of savings and easy investing to help consumers get started with the markets.

Machine learning and trading

Machine learning has become a very important part of financial technology as it helps with predicting the market trend, which results in billions of dollars of revenue. It can run a huge amount of data using algorithms to spot risks and trends.

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Digital payment

Payments

This is one of the most common applications of fintech with payment firms like Venmo having changed how we do business. Now, it’s very easy to send money digitally to any place in the world. Apart from Venmo, Paypal, Square, Stripe, and Zelle are among the popular payment companies.

Lending

Financial technology is overhauling credit by making risk assessment seamless, access easier, and approval processes faster. Today, billions of people from various parts of the world can apply for a loan from their smartphones. Besides, new data points, better risk modeling are expending credit for underserved people.

In addition, consumers can view credit reports several times per year without hurting their score, increasing the transparency of the backend of the lending world for everyone.

Insurance

Insurtech is becoming an industry of its own, but now, it’s still a part of fintech. Fintech startups are partnering with conventional insurance firms to automate the process and help them expand coverage.

So, in the world of financial technology, there are two main users: business-to-business (B2B) and business-to-consumer (B2C).

In B2B, businesses use financial technology and smartphones to obtain loans, financing, among other financial services. Besides, customer relationship management services and cloud-based platforms offer enterprise-oriented services allowing businesses to access and manage financial data.

B2C uses of fintech include apps like Venmo, PayPal, and Apple Pay that let users transfer money digitally. Meanwhile, budgeting apps like Mint let users keep track of their finances. And there are apps for digital credit and insurance services.

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Fintech is shaping the future of banking

How fintech is shaping the future of banking

Financial technology is shaping the future of banking in three ways:

  • Smart solutions: with increasing needs, the banking industry has to search for new, robust, quick, flexible, and abrupt solutions. Banks chose to rely on financial technology to address the urgent needs of customers. Fintech has developed highly efficient solutions for banks.
  • Better customer experience: financial technology focuses on merging digital trends with customers’ expectations to empower customers digitally. With financial technology, consumers have 24/7 access to banking services.
  • Quicker reachability: currently, banks are aiming at making more people use open development as well as Software-as-a-Service (SaaS) solutions. This helps banks in integrating and streamlining operational capabilities toward mobile delivery advantage.
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Fintech is evolving banking in India too

Indian fintech

India is one of the fastest-growing fintech markets in the world with the highest adoption rate alongside China. In 2019, India’s digital payments clocked a total value of $65 billion, which may increase at a compounded annual growth rate of 20% by 2023.

In addition, India has taken over China to become the top fintech funding target market in Asia with investments worth $286 million across 29 deals while China got $192.1 million across 29 deals in the first quarter of 2019.

Best of all, Indian fintech firms can reshape the world of financial services in 3 ways:

  • Financial technology startups will likely reduce costs while improving the service quality.
  • The industry will develop innovative, novel models for risk assessment.
  • The industry will come up with more stable, secure, and diverse services.

Fintech jobs

If you are interested in this industry and want to get a job in financial technology, the following list consists of the 10 best options for you.

  • Blockchain developer
  • App developer
  • Financial analyst
  • Product manager
  • Compliance expert
  • Cybersecurity analyst
  • Quantitative analyst
  • Culture champions
  • Business development manager
  • Data specialist

All in all, this post has covered a lot of information and content around fintech, or financial technology. It is a fast-growing industry and will continue to play more important roles in our lives in the future. We hope that the post has helped you got the first, basic understanding of the term.

>>> 4 Things a Service Business Must Get Right

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