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by Finage at July 10, 2021 5 MIN READ

Finage News

What is Fintech? - How a Fintech Company be successful in 2021

 

It is mentioned information about fintech (financial technology), which aims to improve and automate the presentation and use of financial services, in our blog post.

 

Table of Contents

Financial Technology – Fintech

What Is Financial Technology – Fintech?

Understanding Fintech

Key Takeaways

Fintech in Practice

Fintech's Expanding Horizons

Fintech and New Tech

Fintech Landscape

Fintech Users

Conclusion

 

What Is Financial Technology – Fintech?

Financial technology is what is used to identify new technology aimed at improving and automating the delivery and use of financial services. At its core, fintech is used to support companies, business owners, and consumers in better manage their financial operations, processes, and lives, using proprietary software and algorithms used on computers and, increasingly, smartphones. Literally, fintech is a combination of "financial technology".

Fintech first appeared in the 21st century, and the term was originally applied to the technology used in the backend systems of established financial institutions. Since then there has been a shift to more consumer-oriented services and hence a more consumer-oriented definition. Fintech has now come to include different sectors and industries such as education, retail banking, fundraising, and non-profit and investment management.

Fintech also includes the improvement and use of cryptocurrencies like bitcoin. While this segment of fintech has seen the most headlines, the big money still lies in the traditional global banking industry and its multi-trillion dollar market cap.

 

Understanding Fintech

Broadly speaking, the term "financial technology" can be applied to any innovation in the way people do business, from the invention of digital money to double-entry bookkeeping. At the same time, since the internet revolution and the mobile internet/smartphone revolution, financial technology has grown explosively. Fintech, which originally referred to computer technology applied to the back offices of banks or trading firms, now describes a wide variety of technological interventions in personal living spaces.

 

Key Takeaways

  • Fintech means the integration of technology into offerings offered by financial services companies to develop their use and delivery to consumers.
  • It works primarily by parsing the offerings of such firms and creating new markets for them. Startups disrupt financial incumbents by expanding financial inclusion and using technology to reduce operational costs.
  • Fintech funding is on the rise, but regulatory issues still abound.
  •  

Fintech in Practice

The most spoken and most funded fintech startups share the same feature. By acting more agile, serving an underserved segment, or delivering faster. For instance, Affirm aims to keep credit card firms out of the online shopping process by offering consumers a way to obtain instant, short-term credit for purchases. While rates are high, Affirm alleges it offers consumers with poor or no credit a way to both secure loans and builds their credit histories. Similarly, Better Mortgage aims to streamline the home mortgage process with a digital-only offer that can reward users with a verified pre-approval letter within 24 hours of application. GreenSky aims to link home improvement lenders with banks by helping consumers avoid established lenders and save interest by offering zero-interest promotional periods.

In short, if you've ever wondered why some aspects of your financial life are so distasteful or have felt that it just isn't right, fintech is probably looking for or has a solution for you. For example, fintech tries to answer questions such as: "Why is my FICO score so mysterious and how is it used to assess my creditworthiness?". 

 

Fintech's Expanding Horizons

Until now, financial services institutions offered different services under one roof. The scope of these services ranged from traditional banking activities to mortgage and trading services. In its most basic form, Fintech breaks these services down into individual offerings. The combination of modern offerings with technology enables fintech companies to be more efficient and reduce the costs associated with each transaction.

If one word can describe how much fintech innovations are impacting traditional commerce, banking, financial advisory, and products, that word is "disruption." For instance, mobile-only stock trading app Robinhood charges no fees for trades, and peer-to-peer lending sites like Prosper Marketplace, Lending Club, and OnDeck promise to lower rates by opening competition for loans to broad market forces.

 

Fintech and New Tech

New technologies such as machine learning/artificial intelligence, predictive behavioral analytics, and data-driven marketing will remove the guesswork and habituation of financial decisions. "Learning" apps will not only learn about users' habits that are often hidden to them but also engage users in learning games to better their automatic, unconscious spending and savings decisions.

 

Fintech Landscape

According to CB Insights, counting 26 fintech unicorns worth $83.8 billion globally, fintech startups received $17.4 billion in funding in 2016 and were about to surpass that total in late 2017. North America produces the majority of fintech startups, and Asia is comparatively closer. Global fintech finance reached a new high in 2018, allowing for a significant increase in deals in North America. Funding activity in Europe was at its lowest level in the first quarter of 2018 but rose again in the second quarter.

 

Fintech Users

There are four broad categories of users for Fintech: 1) B2B for banks and 2) business customers and 3) Small businesses and 4) B2C for consumers.

Trends towards mobile banking, increased information, data, and decentralization of more accurate analytics and access will create opportunities for all four groups to interact in ways never seen before.

As for consumers, as with most tech, the younger you are, the more likely you are to be aware of and accurately describe what fintech is. Consumer-focused fintech is mostly targeting millennials, given the huge size of this much-talked-about segment and its growing earnings potential. Some fintech watchers believe that the focus on millennials is more about the size of that market than the ability and interest of Gen X and Baby Boomers to use fintech. Instead, fintech offers little to older consumers because it fails to solve their problems.

 

Conclusion

In a conclusion, in today’s blog, we talked about fintech and its details, used to describe new technology aimed at improving and automating the delivery and use of financial services. We hope that this blog post will be beneficial for you. We will continue to create useful works in order to get inspired by everyone. We are sure that we will achieve splendid things altogether. Keep on following Finage for the best and more.  


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