It’s fairly obvious that over time, the world of finance has moved towards a modern, more digital space, giving birth to Fintech or Financial Technology. If you’re into finance or trading, this fact wouldn’t be lost on you, but if you’re a novice, you might want to take a closer look at everyday life and see that Fintech surrounds you.
For example, Rates.fm — all about finances, illustrates how similar platforms have a significant influence on everyday life, offering diverse financial services online.
To help you understand exactly what Fintech is, read on as you’ll not only get the answers to that question but also a list of technologies that came as a result of this revolution. Hopefully, by the end of the road, you’ll get to appreciate the revolution even more.
Key advances in tech over time
Often defined as the leveraging of current technology to make financial activity more accessible and efficient, Fintech encompasses quite a bit of it. While it seems that Fintech only refers to recent times, in reality, it can be traced back to the latter half of the 1800s, when transatlantic cable was laid in 1866. With it, telegraph technology was leveraged to allow for the transfer of financial information across borders and in the USA, according to Rates.
Since then, the Fintech revolution has seen many eras during which a host of technologies were created. Among these are the following:
- 1918’s Fedwire, which saw federal reserve banks use telegraphic tech to electronically move funds
- The creation of credit cards in the 1950s and the deployment of the first ATM in 1967
- The opening of the first automated stock exchange, Nasdaq, in 1971
- The rise of financial activity, such as banking and shopping being done online between the 1980s and 1990
- The coining of the term financial technology during this time
The modern times
So, you may have noticed that the above list doesn’t cover modern times, specifically in the last 16 years or so. Those who are all about finances to the point of being experts will tell you that a deep dive into them requires its heading. This is because between 2008 and now, several technologies have been incorporated into the finance space, and seek to influence it further going forward.
The first and probably most obvious technological development is the smartphone, of which well over 6 billion exist. With such a statistic, many of the innovations we’re about to discuss are readily available to people, proving that we’re very much deep into a Fintech-centric world. As for the innovations that have been created during this modern age, they include the following:
Paying digitally
This is arguably the most common piece of Fintech, as it is one that smartphone carriers use fairly often. You’ve partaken in the innovation if you’ve used PayPal to transfer dollars or any similar medium to pay for something. Other elements of this innovation include mobile wallets, and digital currencies, which make the payment process that much more efficient.
Banking digitally
Your standard physical bank may be a chore to get through, especially with long lines and the inconvenience of going to a physical place to do basic things. With digital banking, the entire banking operation moves to your mobile device, and on applications that offer services, you can easily do the following remotely:
- Checking your balance
- Depositing checks
- Transferring funds
- Track your spending due to a cashless nature
Insurance technology
The very idea of moving a physical action into the digital realm can also be applied to insurance, which has done the same. Here, technologies such as data analytics and artificial intelligence are used to improve several aspects of the field. These aspects include the customer experience, underwriting, and processing claims.
Blockchain tech
Chances are that you’ve heard of Bitcoin, or cryptocurrency in general, and if you have, then the idea of a blockchain isn’t too foreign. Those who know all about finances know that blockchain technology is behind crypto and the entire decentralized finance movement. This means that with this tech, transactions are made to be secure, transparent, and without a central middleman.
P2P Lending
P2P (Peer-to-peer) lending means entities borrowing money from others, be they individuals, or businesses (P2B). This is done directly between both parties and is such that people can get what they need in a much faster process.
Digital advisors
Robo-advisors are tools used in wealth management and the investment field. Their purpose is to automatically provide services within the space via algorithms.
Online funding
Another element of the Fintech revolution is getting funding for projects via platforms that specialize in that specifically. This is what is referred to as crowdfunding, and it can allow you to connect to a large number of people who can help you with funds.
Their effect on the world
When you think of how fintech affects the world, the first thing that should be discussed is the sheer number of people using it through any of the above means. Because of the number of people and entities using Fintech, it should come as no surprise that startups building the next innovations are going to make the most of an opportunity.
This is best seen in the cases of numerous traditional institutions that see the signs of disruption. Out of fear of getting left behind, these institutions also adopt Fintech and, in doing so, firmly prove that we are in a new era.
Final thoughts
Suffice it to say that fintech and the many forms in which it comes have spread like wildfire across the world and will only continue the more digital things get. For those who are all about finances and their future, the more digital tech is something that is most exciting to be a part of. This evolution has been very much a thing for well over a century but has ramped up in the last 16 years or so.
Because the world is increasingly more digital, Fintech will continue to play a major role in our lives. This is especially true because traditional institutions are adopting some of the above technologies because they recognize that doing the opposite will result in them being left behind.
