What is FinTech (Financial Technology)?

What is FinTech (Financial Technology) and What Does It Do?
Innovations Bringing Traditional Finance Together with Technology

We will start to hear more and more about the concept of "FinTech" in the coming days. So what is FinTech, how does it work and what are the examples? Let's take a look. 

Technology has always been a part of the financial world. We benefit from the services offered by technology in many areas such as credit cards, ATMs, e-commerce platforms. FinTech, which has grown rapidly in the last 10 years, will develop even faster with its innovations.

WHAT IS FINTECH?

FinTech, which stands for "financial technology", is a source of innovation that is drastically changing and improving the traditional financial sector. The term refers to a technology-based approach created to enhance and automate traditional forms of finance for both businesses and consumers. FinTech, a term that can also apply to mobile banking, automated portfolio managers and the trading of cryptocurrencies, encompasses the application of software and hardware to financial services and processes, making them faster, easier to use and more secure.

WHY IS FINTECH IMPORTANT?

Traditional banks and financial institutions are also adopting FinTech services for their own purposes. From digital banks to mobile wallets, from portfolio management to loan applications, we can talk about FinTech at many points. Let's take a look at how some areas of finance have developed with FinTech and some examples.

Mobile Banking and Neobanks

Mobile banking is the focus of many financial technology companies. In the world of personal finance, consumers can easily access their bank accounts, especially on mobile devices. Most major banks now offer some form of mobile banking, especially with the rise of digital-first banks, or neobanks. Neobanks are banks with no physical branches that offer checking, savings, payment services and credit services to their customers entirely through mobile and digital infrastructure. Some banks also allow third-party software applications to access a user's financial information, so-called open banking.

Payment Transactions

FinTech is making payment transactions faster and more secure. Mobile wallets, cryptocurrencies and other digital payment methods reduce the need for physical cash or credit cards. It also makes it easier to send money digitally anywhere in the world.

Investment and Financial Advisory

FinTech offers data analytics and automation tools for investors to make better financial decisions. This artificial intelligence in finance works through algorithms designed to detect trends and risks. This allows consumers to be more informed about investment and purchase risks.

Credit and Debt Management

FinTech facilitates credit assessment and loan applications. It speeds up risk assessment and approval processes and makes them more effortless by facilitating access. It also helps people manage their debts more effectively.

Insurance Services

FinTech is also changing the insurance industry. Many FinTech startups are partnering with traditional insurance companies to help automate processes and expand coverage. Digital insurance platforms offer customers more customized and affordable policies.

Cryptocurrencies

Cryptocurrencies are an important part of FinTech. Several crypto trading platforms have emerged in recent years that allow users to trade different types of cryptocurrencies. Crypto wallets are also being used to keep people's digital currencies safe. Many FinTech companies are also using Blockchain technology for payment processing, money transfer and secure digital identity management.

Sources:

https://bootcamp.cvn.columbia.edu/blog/what-is-fintech/
https://www.forbes.com/advisor/banking/what-is-fintech/