FinTech stands for Financial Technology.
If you’re in business, you may have seen mentions of “FinTech” or “fintech” plastered around online, on television or in printed publishings with no real explanation as to what fintech means – just the assumption that you should already know what it means.
Though still a relatively new term, it’s going to be popping up more and more in the near future (and isn’t going away anytime soon!) so for those curious, “what is fintech?”, we offer this simple explanation…
What is FinTech?
Fintech is a new market that integrates finance and modern technology, disrupting traditional financial structures and business models.
The UK government has identified these four key groupings of technology advancement that could completely transform financial services as we know it throughout the next decade:
- Machine learning and cognitive computing
- Digital currencies and blockchain
- Big data analytics, optimisation and fusion
- Distributed systems, mobile payments and peer-to-peer applications
Europe is the fastest growing region in the world for fintech investments. In 2014, UK fintech alone generated £20 billion in revenue, resulting in this innovative development being likened to the dot-com boom of the late 1990’s. According to the Office of the Mayor of London, 40% of the London workforce is composed of technology and financial services. This is why fintech cannot be ignored. This 21st century marriage of financial and technology services will only continue to strengthen.
Examples of FinTech
Fintech changes the ways that companies conduct business. Fintech companies use software, such as mobile apps, to provide financial services with all the modern-day convenience that we have come to demand. This new culture built on internet access, and the devices which we rely on to consume our online data, dictates that businesses need to quickly adapt and equip themselves for this digital age.
According to Investopedia, fintech users can be broken down into these broad categories:
- B2B for banks and their businesses clients
- B2C for small businesses and consumers
Common examples of fintech being used in daily life include, but are certainly not limited to, crowdfunding platforms (which allow entrepreneurs and small businesses equal opportunity to funding instead of relying on traditional banking) and mobile payment platforms. These days, you can send money attached to an email (using an email service such as Google’s Gmail) or even from within a chat messenger (like Facebook Messenger). Barclay’s PingIt app connects your mobile number to your bank account, allowing its users (whether they’re a Barclays customer or not) to pay other people with no other information besides their phone number – the recipient’s bank account details are no longer a requirement anymore to transfer money directly into an account. PingIt has so far seen over £1 billion in transactions, and someone has even bought a house using the mobile app.
With everything (and everyone!) being online, it’s common sense for finance services to be online too. But with the rise of fintech, financial service companies need to remember that they need to be just as accessible offline as they are online.