What Is Fintech?: Financial Technology Examples, and Why It Matters
A new industry called “fintech” is taking over the financial market to upgrade and change the way consumers, banks, and business owners handle their finances and provide services, including the way personal loans are managed and offered. A combination of the words “financial” and “technology,” fintech companies are focused on using advancements in technology and software to change traditional financial services and banking models to expand on the options consumers have in the market.
Ready to delve deeper into the fintech definition? Banking, loans, payments, and other financial services are rapidly changing due to this financial revolution. Review the following sections to find out what industries fintech has its hand in, and some of the changes companies and consumers are embracing.
Fintech for Cryptocurrency
Bitcoin is a digital currency that’s gained popularity in the fintech industry. It promises low transaction fees and is not regulated by a centralized authority, meaning the federal government doesn’t have its hand in it at all. There are no physical bitcoins and all transactions, trading, and investments are made online through the blockchain. This emerging fintech sector has created several dedicated bitcoin companies and has motivated established companies to participate, including:
- Coinlancer. A blockchain-based platform that attempts to make paying freelance or gig workers easier through secure peer-to-peer transactions.
- Robinhood. An online bitcoin broker that offers commission-free trading between bitcoin owners, as well as account management services.
- Profitcoins.io. A start-up in the cryptocurrency and fintech industries that helps users profit from bitcoin trades and exchanges by providing price fluctuation predictions and automated trade scheduling.
- Libra. Facebook’s digital currency that can be kept in consumers’ digital wallets and is serviced by companies in the “Libra collection.”
Fintech for Payments
Fintech has also gotten its hands into how consumers and companies issue and receive payments. Advanced technologies have allowed consumers to instantly send and receive money using smartphones apps such as Venmo and Paypal. Businesses working with freelance or contractor employers often use these apps to issue payment for services and products. In most cases, there are no transaction fees to process these payments and consumers are only required to connect their bank accounts to the app before use.
There are many other start-ups on the horizon diving into the digital payment industry. Stripe is an online payment system that makes it easy for internet companies to receive instant payment from customers while also keeping track of finances and analytics. Toast is a digital point of sale (POS) system designed specifically for restaurants that makes it possible to complete instant tableside transactions.
Fintech for Budgeting
Consumer budgeting is another issue tackled by fintech companies. By using the latest technologies, consumers can better understand their finances and where they’re spending their money each month by opening a simple app on their smartphones. Mint, You Need a Budget, and Pocketguard are apps that allow consumers to keep better track of their finances so they can make budget changes to reach their financial goals faster.
Fintech for Trading and Robo-Advice
Gone are the days of calling a stockbroker to buy and sell stocks in real-time. Financial technology has bridged the gap between investments, trading, and consumers, allowing stock market and investments to become more accessible, faster, and easier to accomplish.
Smartphone apps like Acorns, Robinhood, and Wealthfront allow participants to invest, get trading advice, and move their money straight from the app. These apps also provide snapshots and potential outlooks for current investments, making them more like personal financial and investment planners than smartphone applications.
Fintech for Personal Loans
Personal loans have also changed due to the software and apps developed by fintech. Some of these applications are responsible for connecting consumers in need of loans with financial institutions that want to provide them. These apps change the way consumers complete loan applications and they also change the way financial institutions examine creditworthiness. Different data sets, including a consumer’s employment history or education, are examined to determine if a financial institution wants to take on a loan.
Fintech companies now make up 38% of the personal loan market. The introduction of these companies to the personal loan industry has helped it grow to a record $138 billion. Some companies, such as Fiona from fintech EVEN Financial, connect borrowers to lenders through an algorithm-based loan network. It uses advanced technology and its relationship with dozens of lenders to match consumers with the best loan options available for their credit profile.
Fintech for Debt Relief
By creating a personal profile on a website or smartphone app, you can be matched with debt relief companies to assist you in becoming debt-free. These apps can analyze your personal details and financial situation to find the best and most efficient solutions. This allows you to choose which company and debt relief process you feel best fits your financial goals and schedule.
A good example is Accredited Debt Relief, which includes an online dashboard for reviewing progress that you can view on your smartphone. This financial technology allows you to create a personalized path to a debt-free lifestyle while easily keeping track of your progress through your online account.
Why It Matters
The innovations that fintech companies have released are making waves. These apps and software configurations make it easier for consumers to keep track of their finances and budget their money in real-time, wherever they are.
The technologies created by leading companies in the fintech industry have also changed the way consumers obtain loans, manage their investments, and engage in the stock market. Applications and software developed by fintech companies can be used to help consumers get out of debt and make payments to friends or family members. The reliable and advanced solutions developed by these fintech companies are changing the way the world exchanges money.
What are some examples of Fintech services?
Fintech is a combination of the words "financial" and "technology," and uses new technology and software to grow traditional financial services. These include crowdfunding platforms, blockchain technology, cryptocurrency, online banking, mobile payments, stock-trading apps, and more.
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