Financial industry is being evolved for many years, as we have seen some advances in the past such as ATMs in the 60s, debit cards in 70s, and online banking in 90s, but still financial industry was lacking the big innovations and transformations, and it was facing the issues like security, slow and complex processes, and delays etc. The concept of FinTech (technology in finance) was always there in one way or another but this term introduced and became so much popular after the biggest financial failure in 2008 which leads to big economic disasters and loss of peoples’ trust on financial institutions such as banks. Now, the world is going through the biggest transformation in the history of Finance, which is FinTech Revolution. FinTech Revolution is going to transform the way traditional financial entities such as banks operate.
FinTech or Fintech is the emerging financial industry which is the combination of technology and finance that aims to design and develop efficient, fast, transparent and secure financial services using innovative technologies such as Artificial Intelligence, Big Data, Internet of Things, Blockchain and Machine Learning etc. Shortly, FinTech is the innovative use of technology in the design and delivery of financial services.
FinTech includes a range of business models, products, and technologies that are changing the financial industry. It refers to everything from online payments and digital currencies to robot-advisors and crowdfunding platforms.
REVOLUTION OF FINTECH
The biggest revolution which made the term “FinTech” common is the rise of mobile-industry (smartphones and tablets). For example, we are paying for something, transferring money, and checking balance through smartphone then we are already a part of FinTech.
Financial services including WeChat, which is not only a messaging application but now it also provides the option of making payments. Likewise, Kickstarter is the popular crowdfunding platform that helps people to bring their creativity into reality, means implement their own ideas. Venmo (digital-wallet app) allows people to make or share payments with their friends. Ripple is the financial service that allows banks around the world to perform direct transactions with each other.
FinTech is widely being used in areas where people don’t have access to banks. There are more than 2 billion people around the world who don’t have bank accounts, so FinTech provides them such financial services (software or apps) through which they can transfer money or pay bills easily. FinTech brings the unbanked people to underbanked, and this revolutionary change called as Financial Inclusion.
For example, Kenya is the country where more than 90% of people use M-Pesa (mobile-app) to pay bills, transfer money, and get loans.
WHY DOES FINTECH MATTER
- FinTech has disrupted several traditional entities in different sectors such as banks, trading, stock exchanges, insurance, crowdfunding, real estate, and that is the reason FinTech has now been the biggest competition for these entities. As a result, these traditional entities have started to be the part of FinTech and now they are providing their own financial services like Apple’s Apple Pay and Alibaba’s Alipay, both are payment services based on mobile apps.
- FinTech provides better results with reduced costs and transaction fees to the customers
- FinTech provides banking services to the people who don’t have access to traditional banks
- Global Fintech Investment is rapidly growing with every passing year. In 2015, it grew by 75 percent means $9.6 billion to $22 billion.
By being a part of FinTech, people don’t need to stay in queue and waiting for their number in traditional corporations such as banks, insurance, and real-estate, instead, they can do all such things on the spot by using the financial services. Finally, the rapid growth of investment in recent years and mainstream usage of financial services has proven that FinTech is the future of the finance.