In 2023, the world became more digital than it’s ever been before. All kinds of technology are used in many different niches. It is like the whole world switched to high-tech solutions. The idea of Financial Technology, or FinTech, is one that’s been around for decades and services of the kind have been common for almost as long according to Kindgeek. So, what exactly is this FinTech and how vast is the subject?
Let’s all check the types of services offered under this area. If you’re not familiar with this subject, you’ll be beyond surprised at how close to it you probably are.
FinTech basics: understanding the industry
FinTech is defined as the innovative use of technology to provide various financial services and solutions. Ii is any piece of digital technology, usually an application or software that gives users the ability to tend to their financial affairs. So, if you’ve ever paid for anything via the numerous digital payment methods out there, then you’ve been exposed to FinTech in a way. As you’ll see, however, this field goes far beyond simply paying for something and is a result of decades of work from people trying to make things easier.
Everything from the creation of the credit card in the 1950s to that of Paypal in 1998 has contributed significantly to the modern innovations used in FinTech. Some of the innovations that are currently of the greatest interest are:
- Blockchain
- Artificial Intelligence
- Machine Learning
- Cloud computing
- Internet of Things
- Cybersecurity tech
How technology is transforming finance area
The use of this tech has continually grown. With the amount of revenue generated exceeding 169 billion dollars in 2023, the industry is experiencing an astounding rate of growth. This is only going to keep growing the more businesses and regular people adopt these innovations and make them the norm.
Some incredible advancements like AI, blockchain and IoT are set to transform the financial world. We see changes in:
- Digital payments and online banking
- Robo and bot advisors
- Peer-to-peer lending (direct connections between borrowers and lenders)
- Trading solutions and cryptocurrencies
- Big Data for better decision-making and security
- Financial services and digital wallets
How it functions
Because of how much FinTech is out there, nothing is exactly uniform until you’re looking for the finer details. The services in the niche provided by companies like Kindgeek are unique to itself.
However, it is crucial for every establishment to focus on some key things. The following is the short list of companies’ characteristics that have to be considered:
- connecting existing user accounts to FinTech applications safely
- allowing safe data sharing, fund transfers and other financial activities
- providing said functional application and web-based solutions
- providing an environment where users have safe access to the tools
These basics allow FinTech providers to reach their clientele, allowing them to do everything they would at a physical location remotely and aided by the above innovations. In doing this, the life of said clientele, be they an individual, startup or a large corporation, will be less of a hassle.
What it brings to the table
As stated earlier, FinTech usage has grown and will only continue to do so. Although not yet fully widespread, the advantages of adopting this financial approach will undoubtedly draw more people in. Some of the benefits include:
- it’s a speedy solution in the sense that commands are made and executed instantly
- it is convenient and money-saving since the activity can be conducted remotely and without additional costs
- extra protective initiatives are enacted to weed out any digital fraudulence
The different varieties
Now we can get into the meat of the matter and discuss the FinTech types. As it stands, the services in the niche are numerous and each of them falls in any of the peer-to-peer, business-to-business and business-to-customer categories. Let’s see a few areas in which technology of this kind is used.
Banking
This is probably the one place that’s the heart of the financial world, so of course FinTech would find its way here. The truth is that just about every activity conducted in a bank has been moved over to the digital realm according to Kindgeek. Everything from opening an account to making a deposit can be done through FinTech solutions remotely and securely.
Embedded finance
This is a reference to financial services companies not exactly a part of the space, offer their clients. Many establishments have this and the services given can come in the form of accounts that they provide to their clients that make paying for products offered easier, hence embedded payments.
Payment solutions
This, as alluded to in one of the above headers is the activity most people associate with FinTech-some doing it unknowingly. While companies such as the aforementioned Paypal are the most known, digital payments are just rising in popularity. Many are already in existence and more are coming, especially when you consider the lucrative nature of the market.
Wealth management
Building wealth and monitoring it is difficult to do at the best of times because you’re often looking at multiple investments and their progress. This is significantly easier to do if data tracking, financial advice, and other solutions are done in one easy-to-find digital space.
Personal finance
FinTech handles Public Financial Management in pretty much the same way it does for wealth management. By placing all the features in an easy-to-find place, staying ahead of the game is easier because the automation that FinTech brings relieves you of the work.
Loan niche and trading
Anyone trying to lend and/or borrow money knows how long of a process it can be in the physical world. This isn’t the case with FinTech, as the ability to look at an applicant’s viability is cut down immensely since an app displays it in a way that’s easy to consume and navigate.
So the FinTech solutions streamline apps viability, making it easy to assess and navigate, saving both time and effort. And when it comes to trading, it has also made a significant impact from complex and time-consuming processes to user-friendly platforms and real-time data. It has transformed the trading landscape, making it more accessible to a wider range of people.
Final thoughts
It’s pretty fair to say that FinTech isn’t going anywhere. The services in the niche are only going to expand until they are accessible to everyone. Other areas include cryptocurrency and insurance, which use numerous innovations such as the blockchain and AI to help.
Regulatory issues as well as cybersecurity threats still linger, but innovations such as the ones above help mitigate them. The more refined these technologies become, the more people will be willing to accept them. This, of course, is dependent on the digital adoption rate as well as the education of those who are not convinced or are unaware.