What is FinTech?
What is FinTech? (financial technology) – Technologies that help financial services and companies manage the financial aspects of a business. These include: software, applications, processes and business models.
Fintech also refers to an industry where companies use new financial technologies and solutions to compete with traditional financial institutions for the hearts and funds of customers. Most often these are tech startups and companies that use fintech tools to improve their services.
For example, Chinese WeChat is a set of applications from the Tencent holding. This platform contains the “WeChat Payments” option, to which every 5th user (889 million people use the application every month) has tied his bank card and has access to the “Wallet”, to all commercial functions and trading accounts. They help pay for many offline and online goods and services with their smartphone. Previously, fintech was perceived solely in the context of internal developments of financial institutions. Now it is as close as possible to the consumer of financial services, since it underlies all online transactions – from money transfers to utility bills.
The history of the emergence and development of the fintech sphere.
The idea of fintech was first embodied in the form of the Diners Club credit card system back in 1950. It was focused on paying for entertainment and travel and came about due to the fact that one of its founders, Frank McNamara, once did not have enough money to pay for a dinner in a New York restaurant. Next came the first bank credit card. In the 1950s and 1960s, self-service points at gas stations, supermarkets and public transport created an environment for the emergence of ATMs. In the 70s, the first electronic trading appeared. Big data took its first steps in the 1980s, and Peter Knight, in his article for the Sunday Times, first mentions the word fintech. To them, he described the bot that made changes to his email. The global crisis of 2008 was the catalyst for changes in finance. People stopped trusting old-format banks. At their request, startups and new business models began to appear that could meet the needs and increased demands of customers. Large corporations turned their attention to fintech and started investing in this area. We recommend taking the Financial Management Test
Over the years of development of the fintech industry, more than a dozen categories have emerged in which companies operate: in the form of detailed reports. Payments are fintech tools that solve the problem of 2 billion people by giving them access to basic financial services. Mobile Internet, smartphones and progressive approaches to financial transactions allow providing access to financial payments even where there are no banking institutions. Lending is one of the most popular areas based on the possibility of lending without the participation of banks. Startups operate on the basis of distributed ledgers and help lenders and borrowers from the consumer and business sectors to profitably cooperate. Money transfers – startups in this area allow users to transfer money without the participation of banks.
They use mobile platforms and simple authentication in their work. Bright representatives-unicorns of the direction: neobank Revolut, TransferWise (a platform for cheap international currency transfers), Klarna (internet payments).
Investment platforms – also called Wealthtech. Includes robotic advisors, digital brokers, micro-investment platforms, and personal finance management programs. Work on automation and market accessibility for retail investors. They are especially appreciated by investors due to predictive analysis and robotization. Security – companies in this area provide easier and more reliable data processing for banks themselves: from customer authentication to measures to protect against fraudulent schemes.
B2B fintech is a direction designed to solve the problems of mutual settlements and data exchange in business. In the area of increased attention: smart contracts based on blockchain technologies. Big Data
Analysis – There are now about 100 fintech startups working on Big Data for the financial sector. Advertising and PR have been using personal data in their activities for a long time, but the financial sector needs a more systematic approach. RegTech is one of the most useful areas for business. Allows you to automatically adapt your business to changes in legislation and market conditions.