Financial technology

Financial technology, often shortened to FinTech, is an emerging industry that uses technology to improve activities in finance. The use of smartphones for mobile banking, investing services, and cryptocurrency are examples of technologies aiming to make financial services more accessible to the general public.

History

Financial technology has been used to automate insurance, trading, and risk management. The advent of the internet and smartphones has brought about a new wave of disruption in the financial world, leading to the emergence of FinTech companies.

Services

FinTech companies provide diverse services that include money transfer, fundraising, money lending, asset management, payments, and more. The technology aims to compete with traditional financial methods in the delivery of financial services.

Money Transfer

Money transfer services such as PayPal, Venmo, and Square Cash allow users to send money to others using their mobile devices or computers.

Fundraising

Online fundraising platforms such as Kickstarter and GoFundMe have disrupted traditional fundraising methods, allowing people to solicit funds from the public for everything from creative projects to charitable causes.

Money Lending

FinTech has also disrupted the traditional money lending industry. Companies like LendingClub, Zopa, and OnDeck offer peer-to-peer lending services, bypassing the traditional banking system.

Asset Management

Robo-advisors are digital platforms that provide automated, algorithm-driven financial planning services with little to no human supervision. A typical robo-advisor collects information from clients about their financial situation and future goals through an online survey, and then uses the data to offer advice and/or automatically invest client assets.

Regulation

Regulation is also a major aspect of FinTech. In many countries, financial regulation is intended to protect investors, maintain orderly markets and promote financial stability. The Financial Conduct Authority (FCA) in the UK for example, is proactively creating rules for the emerging FinTech companies, trying to balance the need to protect consumers and maintain financial stability without stifling innovation.

Future

The future of FinTech is largely unknown but it's clear that it's here to stay and will continue to disrupt traditional financial services. The advent of blockchain and cryptocurrencies, such as Bitcoin, is already changing the landscape and the future may bring even more changes.