What is Fintech?

Apr 22, 2022
What is Fintech

In this article, we will try to learn what is Fintech. I believe that all your questions regarding Fintech, such as what Fintech is? What is the impact of Fintech on our daily life? How can we use Fintech in a better way to earn money from it – will be solved in this article. If you read the article to the end, I am sure you will get the answers to most of the questions that you have in your mind regarding Fintech.

Let’s first start with –

What is Fintech Meaning

Fintech is a word made by conjugating two words: Finance and technology. This tells us that Fintech is a combination of Finance and technology. When we use technology in Finance, it is called Fintech. The companies based on finance use technology for most of their work or if the Finance company’s customers depend on technology. In this case, we also call those companies Fintech companies.

What Are Fintech Companies?

One of the best examples of a Fintech company is your Stock Market Broker. And the app/website (like Robinhood) that you use every day to invest in the stock market is a perfect example of a Fintech app. We generally mean online payment apps, shopping apps, and things like that by Fintech. But Fintech is not only limited to them; instead, Fintech is a very large field.

Fintech is Very Old

The concept of Fintech is very old. It was even there in the 20th century. You will be very surprised to know that we had Fintech in the 60s of the 20th century. The first ATM was invented in the year 1969. At that time, ATM machines and credit or debit cards were great examples of Fintech. However, it is still a very good example of Fintech innovation.

But certainly, that early day’s Fintech is not the same as the Fintech we refer to today. At the beginning of this century, when it spread to the public for the first time, we used to call Fintech companies only those companies that directly used technology. 

Modern Day Fintech

Nowadays, almost every company directly or indirectly uses technology. Banking companies, retail banks, and private banks also contribute to this segment. If you are a regular visitor of our site, you should have read the article on Cryptocurrency, where we had discussed a beginner’s intro to Crypto.

Companies involved in businesses such as Crypto – the exchanges, the crypto apps, or platforms making companies can also be classified into the Fintech category. Not every sector of Fintech is as popular as the others. Some particular painting sectors are very popular among us. Below in this article, we will disclose those sectors in minute detail.

Main Sectors in Fintech

  • Investment / Personal finance
  • Crypto
  • Banking
  • Insurance

Let’s dive into detail.

Investment Sectors

Do you know? Investment is not a modern-day thing. It started long ago and existed in the 17th century also. Now, if you want to invest your money in things like the stock market, Cryptocurrency, and real estate, you can do this easily with just a click on your mobile or computer. But like all of us know, it was not the same all time. In the early days, people used to gather on Wall Street to buy or sell stocks.

Technology has invented products like Stock Broking apps and websites with which we can easily buy and sell stocks that do not require anything but enough funds. These kinds of things like investment apps are one of the greatest examples of Fintech. It uses a complex algorithm to place those orders on Exchange and hand over shares from one to another person.

Personal Finance is not only limited to those apps.

Crypto Apps

It is very easy to buy and sell a particular cryptocurrency. But the technology involved behind this is very hard to understand, and building technology like blockchain is even more difficult. Crypto apps use blockchain technology to transfer money from one person to another person.

Things like data mining, decryption, and encryption happen within a few milliseconds. That’s why cryptocurrency platforms are one of the greatest examples of Fintech in the current time.

Banking

Banking is probably the sector that has been impacted by Fintech the most. In the past times, all work of banks was done manually. We had no option to transfer money from one account to another without going to the bank. All things were dependent on the Bank if we talk about money. Long time waste in banks was common when no technology was implemented in banks.

But after Fintech came to the field, things rapidly changed, and currently, all the banks have adopted Fintech in their works. All investment ideas have indirectly got the impact of Fintech, which banks have directly got from Fintech.

Impact other things probably did not change at our rapid speed if Fintech did not come in the bank. Comparatively, in the case of banks, ATM machines and different kinds of cards were the past innovations of Fintech, while net banking and mobile banking are the newer ones.

Insurance

As banks have adopted Fintech, various insurance companies have also adopted Fintech. As a result, the time of getting everyone a policy in any insurance company has obtained shorter. The time of getting a claim from any person has also been decreasing since we are running on Fintech.

Overall, companies that have adopted Fintech have seen a positive impact on their growth. People are rapidly starting to use new technology. In the 1990s, we did not have mobile phones in every house. Can you imagine how technology has changed that now we have at least one or two smartphones in everyone’s house within the time span of just 30 years?

Just like this example, we are also adopting Fintech in our daily life, and our life has been much easier with Fintech. The future of Fintech is very bright, and companies that have not yet adopted Fintech are really making some big mistakes.

The Negative Impact of Fintech

Some analysts are also expecting that fintech may negatively impact the banking sector. Fintech has made life so easy that we are not dependent on banks for our money now. Now we are investing our money in different kinds of Fintech. That’s why banks did not have that much control over their money when there was less impact on Fintech.

Conclusion

So this was all about Fintech and its impact on our daily life. This article has discussed the impact of sectoral companies like banking and personal Finance in very simple words. I hope that you have got to know the primary idea of Fintech from this article. Thank you for reading the post.