FINANCE & BANKING : What is Fintech?

Financial technology (FinTech or fintech) is the new technology and innovation that aims to compete with traditional financial methods in the delivery of financial services. FinTech is a new industry that uses technology to improve activities in finance. The use of smartphones for mobile banking, investing services and cryptocurrency are examples of technologies aiming to make financial services more accessible to the general public. Financial technology companies consist of both startups and established financial and technology companies trying to replace or enhance the usage of financial services provided by existing financial companies.

DEFINITION OF FINTECH

• Fintech is a new financial industry that applies technology to improve financial activities.
• FinTech is the new applications, processes, products, or business models in the financial services industry, composed of one or more complementary financial services and provided as an end-to-end process via the Internet

FINTECH LANDSCAPE

Some of the most active areas of fintech innovation include or revolve around the following:

Cryptocurrency and digital cash Blockchain technology, including Etherium, a distributed ledger technology (DLT) that maintain records on a network of computers, but has no central ledger . Smart contracts, which utilize computer programs (often utilizing the blockchain) to automatically execute contracts between buyers and sellers. Open banking, a concept that leans on the blockchain and posits that third-parties should have access to bank data to build applications that create a connected network of financial institutions and third-party providers. An example is the all-in-one money management tool Mint. Insurtech, which seeks to use technology to simplify and streamline the insurance industry. Regtech, which seeks to help financial service firms meet industry compliance rules, especially those covering Anti-Money Laundering and Know Your Customer protocols which fight fraud. Robo-advisors, such as Betterment, utilize algorithms to automate investment advice to lower its cost and increase accessibility. Unbanked/underbanked, services that seek to serve disadvantaged or low-income individuals who are ignored or underserved by traditional banks or mainstream financial services companies. Cybersecurity, given the proliferation of cybercrime and the decentralized storage of data, cybersecurity and fintech are interlocked.

ADVANTAGES OF FINTECH

Fintech has also leveled the financial playing field for everyday people, giving them access to services previously reserved for the wealthy or individuals of a certain economic stature. Take investing for one example. Technology and data make it much easier and cheaper to bring investment advice to the less financially able people, which mean something that was geared toward a certain asset level is now open to everyone. This process can be termed as financial inclusion. Now consider lending. In the past, underwriters only had a few data sets to rely on when assessing risk, which meant lots of people were turned down or charged a higher interest rate for a loan. Fintechs are relying on different information when underwriting consumers, looking at things traditional banks have never considered and providing more people with access to personal and business capital. All of that could never happen without powerful computer systems and software and data scientists who can make sense of it all.