FinTech, short for financial technology, refers to the use of technology to improve and automate the delivery and use of financial services. It is primarily used by financial institutions on the back end of their businesses to streamline processes and improve their services to customers.
FinTech includes several different sectors and industries such as education, retail banking, fundraising, nonprofit, investment management, and several others. It is an emerging industry that uses technology to improve activities in finance.
In broad terms, the term “FinTech” can refer to any advancement in how people transact business, from the invention of digital money to double-entry bookkeeping. As the internet revolution took place, it became a major focus for FinTech and currently, it’s often associated with the development of financial technologies that are disrupting traditional financial methods in the delivery of financial services.
The key areas of focus within FinTech are:
- Mobile Payments: This includes payment solutions developed for both consumers and businesses.
- Blockchain/Cryptocurrencies: Innovations such as cryptocurrencies (like Bitcoin) and the underlying technology of blockchain, have been major disruptions in the financial sector.
- Robo-Advisors: Robo-advisors are automated digital platforms providing algorithm-driven financial planning services with little to no human supervision.
- Crowdfunding Platforms: Crowdfunding platforms allow internet and app users to send or receive money from others on the platform, democratizing access to funding.
- InsurTech: This refers to the use of technology innovations designed to make the current insurance model more efficient.
- RegTech: This stands for Regulatory Technology, a new field within FinTech that utilizes information technology to enhance regulatory processes.
The FinTech industry is growing rapidly, with new ventures and technologies popping up regularly. Its implications are far-reaching and have not only reshaped the way traditional financial businesses operate but also created new markets for financial services.