Fintech is used as an abbreviation for Financial Technology, and thus, very clear from its own term that technology used to make finance and financial operations easy and user-friendly. In its core, Fintech is to serve multinational companies, small businesses and other consumers to manage and process their financial operations in a much better way by using specialized and advanced algorithms and software on computers, laptops and nowadays on smartphones also.
The term Fintech emerged in the 21st century and was earlier used by the back-end of the establishment or organizational financial department. Since then, there has been a drastic change in the perception of the users and a great shift has been noticed in its end-users and consumers. Fintech now includes many different sectors like Retail banking, Industries, Education, Non-profit organizations, Investment management and many more.
From double-entry bookkeeping to the invention of the digital money, every innovation in the financial area which has helped the consumer to transact the business in an easy manner is because of financial technology or Fintech
A lot of variety of financial activities fall under the head of Fintech. Activities like, using a smartphone to deposit a check instead of walking into the bank branch, money transfers or raising funds for business startup or applying for credit without interacting with the bank employees or branch manager or managing the investment portfolio without any assistance of a financial advisor. These are some activities that are covered under the Fintech and since the internet connectivity is available on the smart phoned Fintech has grown explosively and the term which was earlier referred to as computer technology for the back-end users is now applied as in very broad and vast level.
Anthony Constantinou shares some active area of Fintech includes the followings:
- Digital cash
- The smart contract, which uses computer programs to execute the contract between buyers and sellers automatically
- Digital landing
- Business without barriers
Fintech is in practice for many years and since then, many new technologies and techniques are added in the queue. Even machinery and equipment are been added in the process from time to time. ie. Auto teller machine(ATM) and Card Swipe machine. Combinations of modern technological developments with the latest financial applications. Fintech has helped the businesses of all types whether large industries, medium enterprises or small or micro-businesses.
It is an estimate that nearly 2 billion people worldwide are not having any bank accounts and for them, Fintech is an agile option to carry on their financial services and contribution to their country’s GDP and that is what Fintech has been designed to do.
Here are some examples of Fintech in the payment system.
PayPal can be said to be the pioneer who even started this revolution. PayPal used to be the first company to provide payment solutions. Today many companies providing similar services are there in the market and pushing the industry into the next level. It is because of Fintech that the cost of moving big money has been sledded down allowing more transparency.
Banks used to charge fees for the payments done or received especially in the case of international transactions. One has to pay heavy transaction fees for international money transfer, as it was impossible to get the middle market rate. But now it is no longer expensive. Rather some of the startups are on the way to solve this problem by eliminating the middlemen.
Fintech has provided a common platform and has opened a new world of opportunities for every business. Much better services are being provided at low prices to consumers. It has bridged the gap between the business and the banks using technology by eliminating inconvenience. It is very important for the business to acquaint with the technology and stay informed and up to date with Fintech development to continue with the easy and hassle-free business.