Financial technology, commonly referred to as Fintech, can be found everywhere. Fintech is adopted daily, from the coffee shop to the rise of cryptocurrencies. The key aim of fintech is to make improvements in the delivery of financial services. Besides, fintech also avails these financial services to the public. Despite being an emerging industry, the global revenues of fintech in 2019 were $112 billion, while in 2018, the investments were $55.3 billion. For the past three years, the investments of fintech have been doubling.
If you are still unaware of what fintech is, read the post below. The information provided is on how fintech works, as well as some examples of fintech.
What is fintech?
Fintech is an innovation that refers to the use of modern technologies in enhancing the delivery of services and products. Fintech mostly focuses on banking, insurance investing, as well as other sectors that relate to finance. Nonetheless, fintech also refers to companies that use mobile devices or the internet to provide financial products and services.
Companies that major with fintech provide alternative products and compete with banks in providing clients with products and solutions. As of February 2019, the Americas experienced the highest number of new fintech institutions at 5,779.
To any young person, generation Z, as well as Millennials, the key payment method that they use, are mobile apps. All this has been possible due to technology where the cash transactions have been digitalized. According to a recent survey by Bruc Bond, more than 65% of people in the US had a mobile payment app. Google Wallet and PayPal are some of the universal mobile payment apps.
Fintech has also encompassed insurance. Home and car insurances are the common types f insurance used in fintech. Using fintech in insurance has been beneficial since risk assessment has been improved, efficiency has been improved, and they offer excellent customer experience. Insurers have become aware of fintech in the insurance industry since they want to remain competitive in the field.
Blockchain technology and cryptocurrency
Cryptocurrency and blockchain technology have made played a role in making transactions not only secure but also faster. The ability of bitcoin to facilitate secure transactions has challenged the ability of banks to do the same. The leading platforms using cryptocurrency are Cash App, Coinbase And Robin Hood. The prominent digital industries have invested in cryptocurrencies for the benefit of the client and compete with other firms.
Fintech has also led to the rise of digital-based financial advisors. Through these channels, customers get solutions to investment and finance questions that they might have. Besides, these Robo-advisors can tailor-make investment plans based on age, debt, assets, and other attributed that the clients might have Ellevest, Betterment, and Wealthfront are some of the apps used to advise clients.
Digital lending and credit
Through this open banking technology, clients can borrow money without any hassle. The financial data of a client is electronically shared and is secure through the approval of the client. The transaction history of the customers is used to leverage the amount the clients get. Some apps use do not require the banking information of a client to give them loans.
Additionally, some fintech companies help to compare and check the best offers. Credit Karma allows clients to identify firms with the best loans and credit card offers.
AI Virtual assistants
Virtual assistants have made it easier to experience and access financial services. Through this technology, clients have been able to easily access their credit score data, know frauds, and make payments. Enos is the best AI virtual assistant.
Fintech has also led to the development of budgeting apps. These apps help in tracking how people use their finances. Through these apps, the customers have been able to account for every coin that they spend. Mint and Acorns are some of the budgeting assistance apps.
Through the development of fintech, the delivery of financial services and products will always be disrupted. Fintech has been the leading influencer in lending, insurance as well as blockchain. Thus, financial institutions will have to invest in fintech to remain relevant in the market.