In the modern global economy, technology is taking a larger and more prominent role in the world of finance. In fact, the merger between finance and technology is becoming so mainstream that there’s a name for it. “Fintech” is the term used to describe the innovative technology that allows businesses and customers to manage their financial transactions digitally. It’s being utilized in a number of sectors, including:
· Investment management firms
· Retail banking industry
· Real estate sector
· Nonprofit world
· Fundraising sector
· Educational institutions
If you are curious about how fintech works or its role in the past, present, and future, here is everything you need to know.
How Did Fintech Begin?
When the term “fintech” was first used, it referred to the technology that financial institutions used in their back-end operations. Consumers still interacted in more traditional ways, such as mailing in a check to pay a bill or going to the bank to make a money withdrawal.
The beginnings of fintech may date back further than you might imagine. An early example of fintech was the very first Automated Teller Machine. This early ATM was launched by Chemical Bank in Rockville Centre, New York, on September 2, 1969.
Over time, the scope and purpose of fintech have grown. Customers have become part of the picture, and fintech has been allowing them to conduct financial transactions digitally rather than in person.
What Are Some Examples of Fintech?
So, what type of current-day transactions are examples of fintech? Well, if you’re part of the majority, you might be surprised to learn that fintech impacts many facets of your life:
· Cryptocurrency is a decentralized form of digital currency that utilizes blockchains and encryption to manage the transfer of funds.
· Mobile banking apps allow customers to check balances, make automatic deposits and withdrawals, deposit third-party checks, and pay other people at the touch of a button.
· Debt-based financing allows small business owners to receive funding in exchange for fees and interest.
· Equity-based financing allows entrepreneurs to exchange equity in their companies for access to funding.
· Insurtech allows policy-holders to handle all aspects of their insurance, including policy changes, bill payments, and claim filings, via a digital format, such as an app or a specialized online portal.
Does Fintech Make a Difference?
Fintech has most certainly made an enormous difference in the way companies and consumers interact. The digital ease with which financial transactions can be completed has made it easier and faster to conduct business in multiple industry sectors, including banking, financial services, insurance, investments, and real estate. Carlton James Director of GBTI agreed when he said, “From corporate lending to payment services, fintech has had a revolutionary impact on modern banking, with technological innovations reshaping the landscape of finance.”
While not everyone is familiar with the term “fintech,” almost everyone’s life has been impacted by it in some way. The merger between technology and the finance world has provided a level of flexibility and freedom to consumers and businesses that far surpasses anything experienced in the past. And the sector is expected to continue growing and introducing more innovations that promise to simplify and facilitate day-to-day life.