Financial Technology (Fintech)
Candlefocus EditorAt its core, Fintech is the use of technology to simplify and improve financial services, products and processes. Companies in the financial sector are increasingly utilizing technology-driven solutions to enhance the customer experience and drive efficiencies. Fintech actually consists of two separate but related aspects - namely, the unbundling of traditional banking services and the creation of new markets for them.
Startups have disrupted the traditional incumbents in the finance sector by using technology to cut down on costs and expand access to services, including mobile payments, online banking, and peer-to-peer (P2P) lending, among others. Fintech investments are at an all-time high, with venture capital investments having tripled in the last three years for both early and growth stage startups.
Regulatory issues still exist, with some states in the US and other global markets having strict rules and laws governing digital financial services. To remain compliant while offering up services catered to the modern consumer, financial institutions and startups must work together to find a balance between regulatory requirements and customer needs.
In the US, some of the more common fintech applications currently include roboadvisors, payments applications, P2P lending applications, investment applications, and cryptocurrency applications, to name a few. Each of these applications has different features and offer different levels of risk, so it is important to understand the differences and compare different options to find the best fit.
For consumers, Fintech has opened up access to a range of services and products that weren’t previously available. This has greatly improved the user experience and financial security. For financial institutions, Fintech has provided a way to stay competitive in the increasingly digital world.
Overall, Fintech has been a major breakthrough in the financial industry and will continue to shape the way we do business in the years to come. Technology is evolving quickly and financial services providers need to be prepared for the changes that come with it.