What is worth knowing about FinTech?
People are often puzzled by the phrase FinTech, but when you pay for something with your phone or receive a money transfer through an application, this is the impact of the revolution in financial services. New technology for financial activities is a vast area of technology, and there are many types and variations of interaction with this mechanism.
According to the Statista website, FinTech revenues are expected to grow by an average of almost 12 percent in the coming years and reach 188 billion euros by 2024. So, how can the field of fintech be helpful for you? Let's learn more about the types of financial technologies to explore what opportunities this opens up.
What exactly is FinTech responsible for?
FinTech is an abbreviation for "financial" and "technological." Therefore, "FinTech soft" is a general term that combines all types of solutions designed to improve and optimize the provision of all financial services.
Modern FinTech is not limited solely to banking software (although online banking makes up a significant portion). It covers many other industries, including insurance, lending and mortgages, asset and risk management, security, and more. This industry is growing at the fastest pace.
Examples of using FinTech in our life
You might be surprised when you count how many services Apps like PayPal, Klarna, and Revolut are considered FinTech, but they are not the same.
Here are the most popular uses for FinTech:
- Digital banking.
- Trading and cryptocurrency.
- Deposit and credit.
- Attracting capital.
These areas are expanding and changing, and some of them are undergoing a complete transformation. We can now define different types of financial technologies by the kind of services they provide.
More recently, the blockchain was considered something unknown and obscure. However, years have passed, and blockchain is no longer a novelty in the financial market. This technology has proven secure, decentralized, and fast in payment processing. From cryptocurrency exchange services like Coinbase to trading and investment platforms like Circle, blockchain solutions are widely used in FinTech products.
From a business perspective, Blockchain solutions can help create a solid digital identity for the user and launch a secure transaction channel for banks. Blockchain can generate investments and provide a smooth and fast audit process.
First, FinTech allows consumers to purchase from their phones or laptops quickly. You can pay your bills via mobile devices from around the world. Opening a bank account and managing it without visiting a financial institution is possible. From here came the ability to send and receive direct deposits in a simple way, and mobile wallets and peer-to-peer transfers became the new norm.
3. Trading and Cryptocurrency
FinTech has affected the stock market. Thanks to new types of fintech services, the popularity of cryptocurrencies has grown significantly. Fintech makes it possible to join the cryptocurrency market and send and receive cryptocurrencies without difficulty. It is also due to the development of the blockchain, as it was able to make crypto transactions properly secure and makes it almost impossible to fake data.
All sorts of FinTechs have added accessibility to the world of trading. And today, every user with an Internet connection can become a bidder. It used to be reserved for experts. Because of this, stock markets worldwide will see an increase in investment.
Another attractive option that has appeared thanks to technology is RegTech. The financial industry has always been bound by numerous strict regulations to prevent money laundering and terrorist financing, data privacy, cybersecurity, etc.
To help business owners meet all the requirements, RegTech providers have entered the market. They offer user-friendly fraud detection and financial risk management tools, providing end-to-end reporting, compliance, and monitoring with AI/ML capabilities and advanced data analytics.
FinTech types have become insurance solutions. The main reason is that quick and easy communication with your insurance company is expected. That is how a new term appeared: InsurTech, which combined the usual functionality of insurance companies and the ability to use their services without leaving home.
Phone apps, auto-monitoring devices, and wearables are part of insurance technology tracking tools to help people get insurance in minutes. Customers want affordable mobile options that quickly summarize information about coverage, commitments, and premiums. Similarly, startups may need insurance coverage for a day or even a few hours. Insurtech can help with this.
Another digital product of our time is a technology that allows you to navigate the world of finance better and get the most out of managing it. Nowadays, people think more about properly managing their money and want reliable tools to monitor their financial activity.
Personal finance management software integrates many different tools and platforms. For example, WealthTech includes apps like Mint that offer users personalized budgeting advice. It also covers e-wallets like Apple Pay and tax preparation tools like Turbotax.
7. Loan funds
A type of FinTech closely related to personal finance is supporting individuals and households in budgeting and managing their financial decisions. Deposit and lending fintech have created micro-loan platforms and "buy now, pay later" systems that allow users can shop in installments. Everyone can do it with just a few clicks on a mobile device. Alternative lending gives customers credit ratings and peer-to-peer loans without going to traditional financial institutions.
PayTech is a payment technology. It includes all kinds of digital payment services and solutions. PayTech is payment gateways, mobile payments, digital wallets, payments as a service, P2P, and more.
This industry is characterized by rather tough competition with traditional banks. However, it has several key advantages: processing speed, ease of use, and security. PayTech market giants such as PayPal or Venmo have become an integral part of the lives of many people around the world.
Online banking solutions (web and mobile) have long been familiar to customers worldwide. Accessing your accounts and performing various financial transactions remotely in seconds through the device of your choice - is this not a victory for technology? Today it isn't easy to imagine even one bank that would not use their digital banking application. Any client of such a bank would rather be surprised if such a service is not on the list of the bank.
From a business standpoint, this is an incredible tool. Today, people value digital banking because it is fast, efficient, and saves time and nerves. Secondly, the digital banking industry is growing. Even now, there is plenty of room for him to succeed. Cardless payments, the golden age of only digital banking, the introduction of voice technology, micro-personalization, and much more. Digital banking has not yet reached its peak.
10. Crowdfunding platforms
There have been many crowdfunding cases in history: services such as Kickstarter or Patreon allowed small startups or even individuals to receive basic or additional funding for their projects. Since it is no longer necessary to go to the bank and ask for a loan, such platforms are gaining popularity. There is still room for newbies in the market. And there are still substantial growth opportunities ahead for this market.
So, now you know that FinTech is all about technology and finance. They are entirely built on online services and appeared due to the demand of modern consumers for new, fast and reliable solutions for managing their finances. Different types of financial technologies can be distinguished by the types of services they offer. The most popular ones are related to e-commerce, such as payment gateways and online payment solutions.
It is no exaggeration to say that financial technology is the future of finance. Fundamental changes in the global financial sector are not far off. Companies are developing various innovative products, including budgeting apps, payment platforms, e-wallets, and other tools to help manage consumer money efficiently.
Of course, the main task of all FinTech startups is to become competitors to traditional service providers. These newcomers are entering the market with more flexible technology, delivering faster services than any old institution can offer.
However, banks and related institutions will not be left out in this game of innovation as they start investing in modern solutions to meet the expectations of their customers. But this is not enough to keep up with innovations and technological trends. To effectively compete with startups, traditional institutions require significant changes in many corporate aspects: from company structure to familiarizing employees with implemented technologies and skills development. Over time, more fintech app ideas for startups will be born, opening up even more opportunities for newcomers worldwide.