What is FinTech?
The term “FinTech” or financial technology refers to new technology that aims to enhance and automate the delivery and usage of financial services. Fintech, at its most basic level, is used to assist organizations, company owners, and individuals manage their financial operations, procedures, and lifestyles more efficiently and to a higher degree. This is done via the use of specialized software and algorithms that run on computers and more recently on smartphones.
The term “FinTech” is a mix of “financial technology” and “financial innovation”.
FinTech has come a long way from when it was first introduced, nowadays it has taken more of a consumer-orientated direction. FinTech nowadays includes various sectors and industries such as retail banking, education, fundraising, and investment management as well as many more.
The world-famous crypto-currencies are also a development of FinTech. Although Bitcoin and the rest of these crypto-currencies may appear to be the stars of FinTech the “big” money is still in the traditional global banking business, which has a multi-trillion-dollar market valuation.
A new way of thinking about finance
FinTech has altered people’s perceptions of money and value exchange in a real-time, digital environment. “Cashless” companies are springing up all over, pushing reluctant customers to adopt the habit of digital transactions and leaving governments with the debate as to whether it is discriminatory or just progress.
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Expecting people to pay for products and services digitally rather than with cash is just a small change that society has had to make. There are far more extreme advancements such as Amazon´s electronic supermarket, “Amazon Fresh”. Here, customers simply take what they need, exit the store, and the products are debited to their Amazon account automatically. These types of ideas are likely to shape the future of retail.
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Another example of FinTech developments that many customers have accepted in current times is payment transfers via mobile phones or smartwatches. While PayPal has been around for a while, newcomers like Venmo, TransferWise, and Zelle are changing the way people exchange money for everyday transactions like splitting a bill and selling products to friends.
What happens next?
We have only scratched the surface of what is conceivable and expected by FinTech. It is drastically transforming our lives and habits by allowing us to trade, bank, and exchange money completely digitally. With big data, blockchain, AI, and other technological advancements now in use or on the horizon, company leaders should look for ways to incorporate FinTech applications into their own business models in order to gain tomorrow’s customers.