Financial technology, often shortened to the term FinTech, is any kind of technology or innovation that is being developed as a replacement or alternative to more traditional financial methods typically used to deliver financial services. Basically, in layman’s terms, FinTech or financial technology is a newly developing industry that uses modern technology to improve various activities in finance. This definition encompasses a wide variety of different companies and services, including everything from online banking to cryptocurrencies.
Today, almost every individual working and living in technologically advanced societies relies on technology in every aspect of their lives. For more than a decade, most people have made the transition from traditional banking to online banking as a result of the spread of smart phone technology across the world. Once they have opened an account with a bank, there is rarely any need to actually step foot within a bank at all. Most employers offer the option of having your paycheck deposited directly into your bank account, and ATMs can be found at most gas stations and grocery stores in America.
Due to the increased proliferation of smart phone technology across the world, most individuals have completely changed the way they manage their finances. Mobile payment applications and services such as Square have allowed consumers to make all of their purchases without needing a wallet at all, simply using their phone to buy products. This increased reliance on the usage of smart phones has allowed FinTech to make inroads in every aspect of the financial and banking industries, from insurance companies to investment firms. Studies have shown that most people in the United States use between one and three mobile applications in order to manage all of their finances.
There are nearly two billion people across the world who do not have a bank account at all, and FinTech allows those people the ability to participate in a number of different financial services without having to deal with a brick and mortar business. This is a perfect example of what FinTech is actually intended to do; give customers the ability to manage their finances directly and easily with modern technological advances. Bitcoin and other cryptocurrencies are another example of FinTech, one that has had a significant impact on the global economy over the last decade. Companies like PayPal and Venmo allow consumers to transfer money to one another digitally, in a way that is much easier than wiring funds from bank account to bank account. Crowdfunding websites like GoFundMe are eliminating the need to go to banks in order to obtain loans. There are applications for smartphones that let you do everything from budget your finances to recommend investment opportunities. FinTech is one of the fastest growing and most lucrative industries to get involved with today.