‘FinTech’ is now the new buzzword in the financial world. It is the term used to describe financial technology, which refers to different technologies like software and mobile applications to automate and improve finances for businesses. Mobile banking, mobile payment apps, and blockchain networks are examples of FinTech.
History Of FinTech
The first FinTech products were the early credit cards in the 1950s. In 1998 came PayPal, a payment system, which operated on the internet. Mobile technology and data encryption followed the development of fintech. Digital banking became widespread because of fintech. Now many people prefer paying bills or purchasing products using their debit or credit cards rather than cash. The popularity of mobile banking is also rising. Recently, the blockchain technology has gained much attention. It allows decentralized transactions to take place without any involvement of a third party.
How Does It Work?
Fintech makes business transactions simple, convenient, accessible, and affordable. It plays an important role in providing secure transactions for companies that use big data, AI, and blockchain technology. The introduction of Machine Learning (ML) and Artificial Intelligence (AI) have redefined the services that fintech companies offer to consumers. These technologies are now the main driving force of fintech. AI can analyze customers’ behavior which helps in business decision making. Big data analytics provide valuable insights about future market trends.
Types Of FinTech
FinTech has revolutionized the financial world. Today there are a lot of fintech companies that provide unique services to their clients. Here we are going to discuss some types of services these companies provide.
Stock Trading
Robinhood is a fintech company providing online stock trading. Their app helps in digital stock trading. People can use this platform to trade without any fee using their laptops or smartphones. Now they are providing cryptocurrency trading as well. AI and Big Data are used in this type of trading.
Peer-To-Peer (P2P) Payment
Venmo allows convenient transactions between friends, family, or businesses for free or low fees. Transactions are done using smart devices and this brings the users to the cashless society. The transaction takes place without the involvement of a middleman. This type of system is affordable, faster, and easier. Apple Pay and Google Pay provide similar services.
E-Commerce Payment
Kharna offers payment services for E-Commerce businesses. Using this payment system, customers have various payment options when purchasing products or services online. They allow direct payment, installment plans, or pay-after-delivery options. They also offer payment on a ‘buy now, pay later’ scheme.
Wealth Management
Wealthfront is a fintech company that provides automatic investment opportunities for users. They provide financial advice depending on the users’ financial goals. They use computer algorithms and software to develop investment portfolios. The software invests the users’ money automatically and re-balances them according to the users’ needs and conditions of the financial market.
Business Payments
Square is a payment service for businesses so that they can accept credit cards on smart devices or termina. Using this service small businesses can accept credit cards without paying high fees. With this service, businesses can process transactions easily, print receipts, and provide virtual gift cards, and other facilities to the customers.
FinTech Banks
Fintech companies have transformed the banking system. With these companies, opening an account is easy. With various technologies, the rate of fraudulent activities is very low, so people now feel confident to open up their accounts with Varo and other companies.
Personal Financial Management (PFM)
These apps help people manage their finances. They consolidate information from multiple accounts to a single dashboard. Apps like Brigit and Dave help people create budgets and manage their money.
FinTech Lenders
Companies like Prosper and SoFi, provide consumer-friendly loan options. They also streamline the loan process so that people can get loans easily when they need them. Kabbage, GoFundMe, and Kickstarter, for example, give loans to small businesses. Lending Club allows P2P lending without the involvement of any traditional financial company. This is possible because of the use of Big Data and analytics.
Cryptocurrency And Blockchain
Fintech companies like Coinbase and Gemini help in buying and selling cryptocurrencies like Bitcoin. This type of exchange reduces the risk of fraudulent activities in case of online transactions.
Insurance
Fintech companies like Insurtech use advanced technology to make the insurance process more convenient for customers. Some of these companies are getting into partnerships with traditional insurance companies to shorten the process of underwriting and claims processing.
Job Opportunities
As the services provided by the fintech companies are very demanding today, there are a lot of job opportunities available in this field. So, you can think of building your career in this sector. You can go to fintech boot camps to have a practical experience in this field. You can also pursue degrees that focus on fintech, like cybersecurity, programming, artificial intelligence, data science, machine learning, and blockchain. Various free online courses are available for learning about fintech. Once you gain the knowledge and experience, you can work in fintech companies as a financial analyst, information security analyst, blockchain engineer, and others.
The fintech industry has experienced tremendous growth over the past few years. B2B, clients of B2B banks, B2C, and consumers are the users of fintech. Fintech companies have opened up various financial services to people all over the world. People can now make safe online transactions and manage their wealth digitally because of fintech. These companies have given financial freedom to many people.
