Fintech – Concept, Characteristics, Practice, Advancement, Users, Focus, Regulations & more

Through this article, we aim to provide our readers with the deep insights in relation with Fintech.

You can learn everything Fintech or Financial Technology has to offer, while you embrace your journey with finance, its maintenance or related aspects.

With the advancement of the world, people are looking for technological advancement as well.

Everyone has come across financial technology knowingly or unknowingly while keeping a track of their finances online.

Usage of the technique is via automated invoicing, or carried out vendor payment at their bank. This broad system through which all these can be carried out is termed as Financial Technology.

What is Financial Technology or Fintech?

Fintech is the abbreviated name for financial technology. Financial technology acts as a bridge between finance and technology.

That is, an industry cocooning any kind of technology in financial services starting from any business to customer.

Fintech can take any form of software which helps in carrying out the financial processes.

It can happen in a more effective manner by breaking the traditional method.

It puts forward technologically advanced ways. Financial Technology covers a very broad concept ranging from mobile banking and insurance to cryptocurrency investment apps.

All these respective applications come under it.

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Understanding Fintech

Fintech companies coordinate technologies such as AI, blockchain, and data science into traditional financial sectors making it safer, faster, and more efficient.

Financial Tech is one of the most fast-growing technological sectors. With its emergence in the 21st century, Fintech is applicable to the technology in the back-end systems of financial services.

With its development, it leaned more towards customer-oriented services.

In the present situation, a lot of different sectors like education, fundraising, retail banking, and investment management come under the blanket of Financial Technology companies.

It also contributes towards the usage and development of cryptocurrencies such as Bitcoins.

EY’s 2017 Fintech Adoption Index, about a third of the customers, is making use of two or three of these companies and they are aware of these companies involving integrally with their life daily.

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Fintech in Practice

There are three types of services that they try to extend to their customers.

These are- Business-to-Business Fintech service which tries to help businesses work together or to help each other more adequately.

This technology is acting as a disturbing force to many other sectors as the cash management, Business-to-Consumer Financial Tech service in which they try to serve the customers in a better way and/or elevate their bottom line, and, Consumer-to-Consumer Fintech service helps consumers to interact in a better way among each other.

The Main Characteristics of Fintech

The main characteristic of Fintech is to provide fast and easy service to the consumers.

For this characteristic to work, Financial Technology needs to challenge or be a threat to traditional financial services.

The crowdfunding platform elaborates them apart from the traditional banking system.

Crowdfunding platforms permit internet users to receive and send money to others and also permit individuals as well as business firms to raise funding from different places all at the same place.

Blockchain and cryptocurrency mostly illustrate the use of Financial Technology companies.

Even though cryptocurrency and blockchain enlisted themselves under the controversial use, they have taken the investment world to its next level of advancement in recent years.

It greatly influences the insurance industry. Starting from car insurance to home insurance and data protection, all these are covered by Finance Tech which also came to be known as insurtech.

Fintech’s Expanding Horizons

Financial services organizations till now have provided a lot of services. These services covered a wide variety ranging from traditional banking activities to mortgages and traditional services.

The mixing up of options with the technology has helped Fintech companies to become more productive. They help in reducing the cost that was in each time when a transaction takes place.

From traditional trading to products that were to work through desktop, branches, and salesmen have now moved to mobile phones.

They are far more convenient and easy and this is only possible because of the involvement of Financial Technology.

For example, the stock trading apps only for mobile have eliminated the charges.

It would have otherwise had an impact, then peer-to-peer sites have promised to reduce the rates by unwrapping the competition revolving around the loans to wide market forces.

An easy and fast stage for securing the working capital that the business loan givers bring to the startup and established businesses.

These funding rounds usually happen for Finance Tech startups all over the world.

Apart from these a lot of industrial technology experts advised that to keep a rapid pace with the Financial Tech-inspired innovations needs a lot more than just enhanced tech spend.

It help the startups to compete with the major companies in the industry by improving their thinking process and ability to make decisions and it can also make changes in the corporate structure.

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Fintech and New Tech Advancement

We have their assistance from machine learning to data-driven marketing strategies that are emerging recently.

They will indulge in guesswork regarding financial decisions. Certain apps for learning the habits of the users tend to hide within themselves.

They not only do their specified job but also help the users with learning games. It can help them to improve the automatic trading decisions that they randomly make.

Fintech is also eager to adopt automation processes in the customer service technology with the help of chatbots and AI focus to help out customers with the basic, simple task and also to reduce the staffing cost.

Fintech Landscape

Maximum Fintech start-ups are more in North America, along with Asia stands close to the second position.

In the first half of 2018, global Financial Technology funding reached a new improvement because of a significant rise in North American dealings.

Asia can easily beat the United States in Finance Tech dealing along with rising inactivity.

The first quarter of 2018 saw a five-quarter low funding work in Europe but it regained the rising graph by the second half of 2018.

Fintech Innovation Areas

Fintech Innovation includes or we can find it to revolve around the areas that we have discussed below.

1. Cryptocurrency and trading with digital money.
2. Blockchain technology, along with Ethereum that has no central ledger of its own as it maintains the records on a network of systems.
3. Smart contracts also involve Finance Technology in which computer programs are made use of to carry out contracts between the buyers and the sellers automatically.
4. Open banking.
5. Insurtech is another name for Financial Tech in which insurance companies use technologies to ease out and streamline the insurance industry.
6. Regtech, which tries to assist financial service providers to follow rules according to the industries.
7. Robo-advisors make use of algorithms to provide automatic investment advice to reduce its cost and increase its accessibility.
8. Unbanked or underbanked services that try to help and serve the low-income individuals.
9. Cyber security definitely has an impact with the financial technology growth especially when it comes to decentralization of data storage being linked to financial improvement.

Fintech Users

Fintech is a great innovation brought up in the economic sector. Before looking into the users of Fintech, a basic understanding of it could be helpful.

Financial Technology competes with traditional methods of financing and banking in the area of service delivery.

There is immense use of technology and innovation to improve financial activity. Most of the digital payment systems and other banking services fall under this.

It is considered that the users of Finance Tech comprise at least 64 percent of the consumers of financial services. These are expected to rise even higher according to the present state.

Fin-Tech is mostly acceptable to the younger generation. This could be because this generation is more popular with technology and has a better knowledge of using them.

Also, the services provided by Finance Technology offer a higher edge than the traditional banks.

Often, traditional banks and financial service providers are not able to upgrade their service in order to meet the expectations of the young generation.

In fact, many of the services brought up by Financial Tech service providers are aimed at making a good market from Millennials.

Millennials often feel that the traditional banks aren’t yet ready or capable to shift according to the technological revolution.

This could keep them away from a number of useful features. Thus, millennials often prefer Financial Technology for their financial services.

Generation Focus of Finance Technology

Fintech also has a good proportion of users from an older generation. Many members of the older generation are also being comfortable with the use of technology.

Various programs are also held to help this. Thus, there would also be considerable participation from older generations in Finance Tech.

It would be preferred due to the advancement of technology and the additional uses provided. Users of Financial Tech are increasing by the day.

More and more people are realizing the benefits of the technology provided. Thus, as more innovation could be expected in the future, the number of users would also see a rise.

Slowly, the Finance Technology industry might take over the financial sector and the users from traditional providers might shift to Fintech. Such a time isn’t far away.

Regulation and Fintech

Fintech involves combining financial services with technology. Like any other, Financial Tech also has its share of regulations and managing bodies.

Finance Tech makes use of specialized software and algorithms to help customers basically, companies, business owners and clients to manage financial transactions and processes.

However, these cannot be let as it is. Thus, there are regulatory bodies with a number of guidelines and regulations to monitor and manage the functioning of these Financial Technology bodies.

Fintech regulators around the world mostly get stuck on the technological innovations that come up by the second. These could be a bit harder to catch up on.

The existing regulations for financial bodies might not suffice the management of Finance Technology. Thus, most countries around the globe have set up regulatory schemes and centers for Fin-Tech.

The main concerns considered while dealing with Fintech regulations are the chances of misuse of technology.

This includes subjects of cybersecurity and spam services that are increasing by the day.

There shouldn’t be any compromise on the market integrity and monetary policies followed by the countries.

The blockchain, distributed ledger, and crowdfunding are an important area to monitor under this aspect.

The regulation solutions is often classified into three, direct organizers, users of technology for financial service delivery, and specific promoters of context services.

These include most of the service provided by various means. The financial regulation for each country is different.

There are laws pertaining to the financial activities in each country. Thus the regulations of Fintech also could not be brought out in uniformity around the globe.

The regulations and policies accepted by the countries would be based on the individual history, culture, and economic position of the country.

Few Concerns related to Financial Technology

The main concerns would be to manage investment frauds, cryptocurrency security, systemic risk regulation, money laundering, and taxation.

The policies made regulations should be brought up ensuring that they do not meddle with the functions and usability of the Finance Tech options.

The overall help provided by the Financial Technology services shouldn’t be affected. Thus, there should be enough help from technical experts to provide advice on structuring the regulations.

Fintech is growing by the day. So, there would be the need to put more interest in futuristic planning while bringing in regulations.

Many countries have already brought up many policies for the same while many see the process of the same.

Conclusion – Fintech or Financial Technology

Traditional banking lays its attention more towards the interests of its shareholders. On the other hand, Fintech focuses on the needs of its end users.

Finance Tech is capturing the market of the traditional banking system as it helps the users in having an easy life.

Business Insider survey shows that 89% of people who responded to the survey accepted that they use mobile banking.

When this survey was done on millennials, 89% of participants revealed their preference for mobile banking hit a rise of 97%.

This survey clearly shows how Financial Technology is readily capturing the traditional banking system.

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