TechDogs-"Understanding Financial Technology"

Financial Technology

Understanding Financial Technology

By TechDogs Editorial Team

TechDogs
Overall Rating

Overview

Once upon a time, during the hunter-gatherer era, humankind lived in the economy of favours AKA barter system, where one trade was exchanged for another (a piece of meat for medicine). However, barter is only effective when exchanging a limited range of products. Why? As economic relations are too numerous and too complex.

Then came the rise of cities and kingdoms along with the mental revolution where people accepted money for systematically representing the value of goods and services. Things were good for a while but then came the digital revolution and that's where the Financial Technology (FinTech) industry is now - amidst a high-speed digital revolution.

Check out this introductory article on FinTech to learn more about what, why and how of Financial Technology.
TechDogs-Manage Your Business With Some Fine Tech-"Understanding Financial Technology"
It's 5 p.m. on Friday, October 1, 2019 and you've just received your paycheck for the month. All set for your Friday night adventure, you click a picture of the paycheck from your smartphone camera and upload it to your bank's mobile app. Deposit the salary? Check. After that, you use PocketGuard to estimate your monthly entertainment spending so that you make wise money decisions and don't go overboard with your weekend splurge. Adulting? Check. Using Splitwise, you split the dinner bill between you and your friends and pay with an easy swish using Apple Pay. Make a dapper money move? Check. Finally, when the clock strikes twelve, you make your Cinderella move and hop in an Uber to go home and pay for the ride using the pre-saved credit card - or even Bitcoin. Feel like a FinTech Guru? Check!

FinTech is the unsung hero of our daily lives; even if you aren't aware of it, it is most certainly a significant part of your personal and professional life. However, FinTech, like many other rising technologies, may feel like a hazy idea due to the vast array of tools, platforms and services that lie under its extensive umbrella. So, if you're still unsure about what it is, here's a quick rundown.
 

What Is FinTech?


FinTech Financial Technology is simply the integration of finance and technology used to improve business operations and deliver financial services. FinTech may be described as software, tools or services that employ advanced technology to enhance financial processes by challenging old methods.

The next stop on our train of thought is at the 'history and evolution of FinTech' station.

Choo Choo!!
 

How Did FinTech Change Over The Years?


The history of Fintech is divided into several eras, each witnessing a particular difference, leading to changes in the manner in which people interacted with their money. First, let's look at the FinTech revolutions over the years:
 
  • FinTech Revolution 1.0 (1886 - 1967)

    The first FinTech revolution was all about the development of infrastructure to enable globalized financial services. For example, the first Transatlantic cable established in 1866 and Fedwire in 1918 in the United States encouraged the first electronic fund transfer system using telegraph and Morse code. That's a script for historical fiction right there!

  • FinTech Revolution 2.0 (1967 - 2008)

    The first ATM (Automated Teller Machine) was installed by Barclays in 1967, signalling the beginning of the second FinTech revolution, defined by the transition from analog to digital financial systems. In addition, NASDAQ (National Association of Securities Dealers Automated Quotations), the world's first computerized stock market and SWIFT (Society for Worldwide Interbank Financial Telecommunications), a communication system between Financial Technology companies that facilitates massive volumes of cross-border transfers, were both founded in the 1970s. Finally, PayPal was founded in 1998, foreshadowing the new payment methods that would emerge as the world moved more and more online.

  • FinTech Revolution 3.0 (2008-Current)

    FinTech 3.0 represents a shift embracing global achievements in digital banking. Lack of faith in banks and regulatory changes opened the market to new suppliers in the aftermath of the financial crisis of 2008. As one of the results, in 2009, Bitcoin was launched, followed by other emerging technologies like cryptocurrencies based on blockchain technology.


The rise of new technologies opened the gates to simplified digital banking solutions with the help of Open Banking. Banking as a Service (BaaS) platforms such as Treezor and SolarisBank are good examples of tools that helped banks and other financial products move away from complex legacy systems and start "neo-banks" - entirely digital banks focused on Big Data and enhancing the client experience.
 

Types Of FinTech Applications


TechDogs-"Types Of FinTech Applications"-2D Image Of Human Characters As Employees Discussing The Finance Graphs Of The Company
FinTech completely transforms a variety of financial services, affecting business models and products and how customers handle their finances. Here are some of the essential FinTech applications that are transforming the financial market today.
 
  • Payment Solutions

    Thanks to new digital processing methods and networks, payment applications are altering the whole sector. It makes digital communication easier, reduces the cost of processing and protects consumer identity. The main areas of focus are asset administration and payment processing procedures.

  • Mobile Payment Systems

    FinTech also has an enormous influence on mobile payments technology. Almost every transaction a consumer makes involves the processing of payments. Many individuals and companies use mobile wallets and similar integrated payment solutions that are safe, convenient to use and provide a terrific experience.

  • Personal Wealth Management Systems

    This field of FinTech applications focuses on the improvement of funding business and consumer wealth management procedures. Personal wealth applications provide a wide range of features to help with safe and swift financial management. They are used by both consumers and businesses to manage their investments and portfolios.

  • Banking Solutions For Consumers

    To improve their services, several conventional banking institutions are integrating digital technology. For example, access to money through mobile applications that provide easy-to-use banking services to consumers. This type of FinTech solution improves the user experience, lowers expenses and reduces friction compared to traditional slow and time-consuming banking methods - you know, the ones that doesn't bring you any joy!

  • Blockchain

    Blockchain is the buzzword in the FinTech world. Solutions such as Blockchain-powered trading platforms, peer-to-peer transactions, smart contracts, decentralized ledgers and immutable records are driving blockchain technology in the FinTech market. This cutting-edge technology allows for the transparent tracking of financial transactions throughout their entire lifecycle. It is also earning more consumer trust thanks to its decentralized and distributed nature.

  • Building Insurance Technology

    The insurance business, which is already adopting digital solutions to improve customer experience and promote operational efficiency, may benefit significantly from FinTech applications. However, to have a more significant effect on their services, insurance firms are using smartphone applications, the Internet of Things and Artificial Intelligence (AI). These innovations transform the insurance industry, bringing benefits such as higher personalization, tailored financial offerings and access to online markets.

  • Regulatory Applications (RegTech)

    The Financial Conduct Authority established RegTech in 2015 as a subset of FinTech that focuses on developing technology that makes regulatory compliance simpler. Innovative solutions are used in this industry to improve compliance and the delivery of secure, cost-effective and easy-to-integrate rules. Its goal is to standardize and increase the transparency of regulatory processes and automate functions like risk management, transaction monitoring and regulatory reporting to some level.

  • Fraud Prevention & Cyber Security

    Staying ahead of fraudsters and cyber-criminals is essential for protecting enterprises against fraud and cyber-attacks. When the entire operation relies on technology, it becomes critical to discover security weaknesses and close them before a single event occurs. This necessitates ongoing testing and the construction of fake environments using deep learning and machine intelligence on the backend. Many new businesses have emerged in this space and are now providing services to banks as extended partners or specialized suppliers. Real-time notifications on potential frauds based on pre-defined rules, multi-level tracking and verification without compromising efficiency are just a few examples.


So many types and so many things; how does FinTech benefit you? Let's find out.
 

How Does Financial Technology Really Benefit You?


Technology has only one real use - make life simpler! So, here's the breakdown of all the benefits of FinTech for businesses and platforms for consumers.
 
  • Convenient Financing

    FinTech takes advantage of mobile connectivity to make online transactions more convenient and efficient. Consumers are increasingly adopting tablets and smartphones to handle their finances and FinTech start-ups assist them in streamlining these procedures, improving their overall experience.

  • Personalization Is Always Better

    FinTech app developers frequently include data analytics tools in their products which simplifies tracking and responding to changing demands. Businesses can provide consumers with entirely tailored experiences and services thanks to all of this data. In addition, access to a wide range of client financial data is increasingly being used as an application to build whole business models now.


Want to know what happens next with FinTech? Of course, you do!
 

Looking Into The Crystal Ball Finding The Future Of FinTech


TechDogs-"Looking Into The Crystal Ball Finding The Future Of FinTech"-2D Image Of  Computer Screen With A Bitcoin Symbol
Although looking into a crystal ball and forecasting the future is impossible, we at #TechDogs will give it a shot. Blockchain and open banking, the underlying technology that has propelled the FinTech 3.0 revolution, will continue to fuel future innovation. Machine Learning will change the way we engage with banks and insurance businesses to strengthen client relationships. Financial institutions will target people with custom offers and support tailored to their preferences, resulting in a more relevant experience for them.

Consumers will have a unique picture of their money, thanks to new digital banks with integrated platforms that can offer payments as an add-on to an existing complete company management system. You can handle bookings, stock exchange and payments in one system, providing rich insights and reports that provide business owners with crucial information about how their firm is functioning.

Finally, what is the verdict? FinTech has firmly established itself as a key participant in the global trade, economic environment and social fabric. The field is large, growing quickly and looks to be here to stay.

Frequently Asked Questions

What is FinTech and how does it benefit businesses?


FinTech, short for Financial Technology, refers to the integration of finance and technology to enhance business operations and deliver financial services. It encompasses various software, tools, and services that leverage advanced technology to improve financial processes, challenging traditional methods. For businesses, FinTech offers numerous benefits, including convenient financing solutions facilitated by mobile connectivity. FinTech startups streamline online transactions, making them more efficient and accessible via smartphones and tablets. Additionally, FinTech developers often incorporate data analytics tools into their products, enabling businesses to personalize their offerings based on consumer preferences and behavior. This level of personalization enhances customer experiences and allows businesses to tailor their services to meet specific needs, ultimately improving customer satisfaction and loyalty.

What are the different types of FinTech applications and how do they impact consumers?


FinTech applications encompass a wide range of services that transform various aspects of financial management for both businesses and consumers. These applications include payment solutions, mobile payment systems, personal wealth management tools, banking solutions for consumers, blockchain technology, insurance technology, regulatory applications (RegTech), and fraud prevention & cybersecurity measures. Payment solutions and mobile payment systems simplify digital transactions, reducing processing costs and enhancing security. Personal wealth management systems offer features to manage investments and portfolios, empowering users to make informed financial decisions. Banking solutions for consumers provide convenient access to banking services through mobile applications, improving user experiences and reducing friction compared to traditional banking methods. Blockchain technology ensures transparent and secure financial transactions, while insurance technology enhances personalization and efficiency in the insurance industry. Regulatory applications focus on simplifying compliance processes, while fraud prevention and cybersecurity measures safeguard against financial fraud and cyber-attacks. Collectively, these FinTech applications revolutionize financial services, making them more accessible, efficient, and secure for consumers.

What does the future hold for FinTech and how will it impact businesses and consumers?


The future of FinTech is characterized by continued innovation driven by emerging technologies such as blockchain, open banking, and machine learning. These technologies will revolutionize the way businesses engage with financial institutions and insurance companies, strengthening client relationships through personalized offerings and tailored support. Consumers can expect a more integrated financial experience, with digital banks offering comprehensive platforms that combine payments, bookings, and stock exchange functionalities. These platforms provide rich insights and reports, empowering business owners with crucial information about their company's performance. Overall, FinTech has firmly established itself as a key player in the global trade, economic landscape, and social fabric, and its continued growth and innovation promise to shape the future of finance for businesses and consumers alike.

Enjoyed what you've read so far? Great news - there's more to explore!

Stay up to date with the latest news, a vast collection of tech articles including introductory guides, product reviews, trends and more, thought-provoking interviews, hottest AI blogs and entertaining tech memes.

Plus, get access to branded insights such as informative white papers, intriguing case studies, in-depth reports, enlightening videos and exciting events and webinars from industry-leading global brands.

Dive into TechDogs' treasure trove today and Know Your World of technology!

Disclaimer - Reference to any specific product, software or entity does not constitute an endorsement or recommendation by TechDogs nor should any data or content published be relied upon. The views expressed by TechDogs' members and guests are their own and their appearance on our site does not imply an endorsement of them or any entity they represent. Views and opinions expressed by TechDogs' Authors are those of the Authors and do not necessarily reflect the view of TechDogs or any of its officials. While we aim to provide valuable and helpful information, some content on TechDogs' site may not have been thoroughly reviewed for every detail or aspect. We encourage users to verify any information independently where necessary.

Join The Discussion

- Promoted By TechDogs -

IDC MarketScape: Worldwide Modern Endpoint Security for Midsize Businesses 2024 Vendor Assessment