Fintech is the term used to refer to innovations in the financial and technology area, and typically refers to companies or services that use technology to provide financial services to businesses or consumers.
What Is Fintech?
Fintech is a term used to describe financial technology, an industry encompassing any kind of technology in financial services – from businesses to consumers. Fintech describes any company that provides financial services through software or other technology and includes anything from mobile payment apps to cryptocurrency.
For the estimated near 2 billion people worldwide without bank accounts, fintech provides a nimble option to participate in financial services without the need for the brick-and-mortar.
But apart from budgeting apps, what are other uses of fintech?
So how is fintech being used in 2020, and what are some of its traditional uses?
1. Crowdfunding Platforms
Companies like Kickstarter, Patreon, GoFundMe and others illustrate the range of fintech outside of traditional banking.
Crowdfunding platforms allow internet and app users to send or receive money from others on the platform and have allowed individuals or businesses to pool funding from a variety of sources all in the same place.
2. Blockchain and Cryptocurrency
Cryptocurrency and blockchain are hallmark examples of fintech in action.
Cryptocurrency exchanges like Coinbase and Gemini connect users to buying or selling cryptocurrencies like bitcoin or litecoin.
But in addition to crypto, blockchain services like BlockVerify help reduce fraud by keeping provenance data on the blockchain. And while cryptocurrency and even blockchain may be somewhat controversial uses of fintech, they have certainly taken parts of the investment world by storm in recent years. You can also check this blockchain page to learn more.
3. Mobile Payments
It seems as though everyone with a smartphone uses some form of mobile payments. In fact, according to Statista data, the global mobile payment market is on track to surpass $1 trillion in 2019.
Using increasingly sophisticated technology, services have emerged that allow consumers to exchange money and payments online or on mobile devices – including popular payment app Venmo.
Apple (AAPL) and Alibaba (BABA) got in on the mobile payment business with Apple Pay or Alipay.
Fintech has even disrupted the insurance industry. In fact, insurtech (as it’s been so-called) has come to include everything from car insurance to home insurance and data protection.
Additionally, insurtech startups are increasingly attracting funding, with insurance startup Oscar Health securing some $165 million in funding in March of last year – at a $3.2 billion valuation, according to CNBC.
Additionally, popular personal finance company Credit Karma was valued at $4 billion, according to Forbes in 2019.
5. Robo-Advising and Stock-Trading Apps
Robo-advising has disrupted the asset management sector by providing algorithm-based asset recommendations and portfolio management that have increased efficiency and lowered costs.
Since the rise of more advanced technology that can analyze various portfolio options 24/7, financial institutions have adapted to offer online robo-advising services – including the likes of Charles Schwab -and Vanguard.
Additionally, other popular robo-advising services include Betterment and Ellevest.
And with inexpensive and low-minimum apps like Robinhood or Acorns, investing from anywhere with any budget has never been easier.
6. Budgeting Apps
One of the most common uses of fintech in 2019 is budgeting apps for consumers, which have grown exponentially in popularity over the years.
Before, consumers had to create their own budgets, gather checks, or navigate excel spreadsheets to keep track of their finances. But after the fintech revolution prompted the development of financial services apps, consumers can easily and efficiently keep track of their income, expenses, and other budgeting tools that have revolutionized the way consumers think about their money.
Budgeting apps like Intuit’s (INTU) Mint help consumers track their income, monthly payments, expenditures, and more – all on their mobile device.
There are plenty of exciting fintech stocks – whether new to the market or tried and true staples.
PayPal has long been a favorite on the market, even despite recent weak forecasts for 2019. In fact, PayPal racked up some 267 million users worldwide as of the end of 2018 – adding some 31% more accounts for the year.
But apart from the mobile cash app, there are several other fintech stocks catching analysts’ eyes.
Visa is considered in the fintech space now, and analysts seem bullish on the stock’s potential given the company’s increasing shift toward plastic and technological advances.
Who Uses Fintech?
While many of us may have a budget app or two on our phone, who are the other users of fintech? And how is fintech being used in different ways?
B2B (Business to Business)
Before fintech was developed, businesses would go to banks to obtain loans and financing. But with the advent of fintech, businesses can easily get loans, financing, and other financial services through mobile technology.
Additionally, cloud-based platforms and even customer-relationship management services like Salesforce provides B2B services that allow companies to interact with financial data to help improve their services.
B2C (Business to Client)
Of course, fintech has many businesses to clients, or B2C, applications. Cash apps like PayPal, Venmo and Apple Pay all allow clients or customers to transfer money via the internet or mobile technology, and budgeting apps like Mint allow customers to manage their finances and expenses.
Much of the banking industry’s first forays into fintech were focused on B2C applications like lending and payment services.
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