What Is Fintech? A Quick Definition | Fintech Financial Management Platforms

Fintech Definition

Fintech (Financial Technology) is a term used to describe financial technology companies, which provide financial services using digital technologies. Fintech firms may offer products and services across various sectors including banking, insurance, payments, asset management, capital markets, lending, mortgages, e-commerce, crowdfunding, remittance, etc.

 

The advent of fintech has led to a rise in innovation, competition and efficiency in the financial sector. In addition, fintech startups have been able to use technological advancements in the field of computing and mobile devices to disrupt traditional finance industry practices.

 

What Is Fintech?

“FinTech” is a term that is being thrown around quite a bit these days. But what exactly do we mean? We mean any industry that utilizes technology to help make our lives easier and better. There is no doubt that FinTech has become huge in recent years. By 2020, it is estimated that FinTech will have grown to reach $22 billion worldwide. Let’s take a look at some of the different aspects of FinTech and how they can affect our daily lives.

 

How Does FinTech Work?

The first thing that comes to mind when thinking about FinTech is banking. If we were able to integrate FinTech into finance, then it would allow us to transfer money faster than ever before. Our current processes require several steps to transfer money between people. For example, we need to go to the bank, open an account, deposit money, withdraw money, use a debit card, etc. In the past, none of this was possible. Now, however, almost everything can be done electronically. Imagine if you could pay for goods online without using a credit card. That is something that was not possible just a few short years ago. Now, we can send payments instantly.

 

Another aspect of FinTech is how we access information. As I mentioned earlier, we now have many options to access information. Before the internet, you had to wait until someone else told you something. You had to call them, email them, or sit down and read their book. Thanks to things like social media, we can share information with others much quicker. Nowadays, we can post Instagram pictures of ourselves eating pizza and our friends can comment on them without even leaving their house.

 

Finally, FinTech allows us to manage data. Back in the day, if we wanted to find out information, we actually had to physically go to a place to search for it. Today, we can keep track of things using apps on our phones and computers. For instance, we can check the weather, check our balance, buy groceries, and plan trips all from the comfort of our homes.

 

Why Do We Need FinTech?

Now that we know how FinTech works, let’s talk about why we need it. Because of FinTech, we are making changes to our financial systems. Every year, billions of dollars are spent on traditional ways of transferring funds. Most people still use checks or cash to pay bills, shop, send money, or give gifts. However, these methods are outdated. When we think about the future and what the world will be doing in 10-15 years, we are going to be spending less time printing paper checks and more time paying for things digitally. We also need to consider how we are managing our personal finances. The average person spends roughly 30% of his/her salary on housing each month. This means the majority of our income goes toward our housing costs. If we want to save more money and build wealth, we should be looking at investing instead of spending as much as we do on rent.

 

These are just some examples of how FinTech is changing our lives. How do you feel about FinTech? Would you prefer to carry around a wallet full of plastic cards, or would you prefer digital solutions?

 

How do you feel about FinTech?

FinTech is taking over finance and how we use our money. Our smartphones have become the ultimate bank accounts, allowing us to pay bills on-the-go, track spending and set-up alerts to keep us informed. More exciting than these features though, are the innovations being created by startups who are disrupting traditional banking with new and innovative products. Startups in the FinTech space are moving away from the old way of doing business – where people go to their banks to ‘store’ their cash and they deposit it at different times throughout the month. We no longer need to wait in line and be frustrated by small windows of time to access our finances. Instead, we now carry around a supercomputer in our pockets that is constantly monitoring our spending. So, what does all this mean? In short, it means that financial services are evolving and the future of banking looks incredibly exciting.

So, what are some examples of startups innovating in the FinTech space? Let’s take a closer look.

 

Fintech Financial Management Platforms

Ampay (www.ampay.com) - Allows users to create a personal account to store cryptocurrency and receive rewards for spending using cryptocurrencies. Users earn points when they shop online or spend money at participating merchants. Points can then be redeemed for gift cards, travel credits and Amazon.com vouchers.

 

BillGuard (www.billguard.com) - A free service that monitors your credit card transactions and provides real-time alerts if any unusual charges appear. BillGuard sends a notification to your phone and email when a transaction appears that might require further investigation.

 

Buxfer (www.buxfer.com) - Helps you manage your budget by helping you identify how much money you have left each day. You can easily check your balances, transfer money between accounts, make payments and even find out if your friends and family owe you money!

 

Chase Freedom allows you to view your balance, monitor spending and get alerts if you exceed your daily limit. You can also choose to auto-pay recurring monthly bills.

 

SafeWallet connects consumers directly to financial institutions to provide both security and convenience. SaferWallet offers its customers digital wallets, mobile and web applications, and APIs.

 

Tanium (www.tanium.com) - Provides cloud computing services to companies looking to reduce IT costs by automizing processes and eliminating downtime. Ti-Anit creates cloud solutions including virtual servers, databases, networking, storage, backup and disaster recovery. Customers include Fortune 500 companies.

 

Payoneer (www.payoneer.com) - Designed to help businesses accept payment via Paypal, Stripe, Dwolla, etc.

 

Cryptocurrency Fintech

Bitcoin

Bitcoin is the largest cryptocurrency, and is a decentralized digital currency that was created by Satoshi Nakamoto in 2009. Bitcoins are produced at a rate of about three million per day, although due to their popularity, their production rate increases each year. Unlike fiat currencies, bitcoin transactions cannot be manipulated by banks or governments; they rely on blockchain technology instead. A cryptocurrency is generally considered secure if its distribution is not centrally controlled. In contrast, a centralized currency's security relies on government regulation and central banking systems.

 

Ethereum

Ethereum is a distributed computing platform featuring smart contract functionality, similar to the Ethereum Virtual Machine. It uses blockchain-based decentralization to record transactions and maintain the integrity of data stored regarding agreements between users. Once a transaction executes on the network, it becomes permanent and unchangeable.

 

Ripple

Ripple (XRP) is often referred to as the 'fuel' of the internet, due to the fact that it enables real time gross settlement payments across international markets. There are two different cryptocurrencies associated with the Ripple network: XRP and Ripples.

 

Stellar

Stellar is a payment network based on the blockchain technology where money moves fast and cheaply from person to person anywhere in the world, without going via a financial institution. Stellar’s ledger system is maintained via consensus algorithm among nodes called “stellar validators”. These stellar validators help keep track of who owns what. Each user account is given 50 free credits to send value between themselves.

 

IOTA

IOTA is a distributed ledger protocol that seeks to address performance issues with current blockchains. IOTA claims the foundation of their idea behind the tangle structure, rather than traditional blockchain structures, making transfers extremely quick and cheaper while ensuring full confidentiality of transactions.

 

Lisk

Lisk is an open-source SDK for building blockchain applications using JavaScript. It facilitates the creation of DApps, smart contracts, token sales, crowdfunding campaigns, and crowdsourced applications. Lisk works on the basis of Delegated Proof-of-Stake Algorithm.

 

Omise Go

OmiseGo is a payment platform that is capable of conducting cross border transactions instantly and cost effectively. Using Ethereum as its backbone, OmiseGo is designed to produce scalable solutions for eCommerce and finance services.

 

What is an example of a FinTech?

FinTech is a term often used to describe financial technology, otherwise called fintech, which refers to innovation in the financial services industry. FinTech encompasses technologies that help make banking easier, faster, cheaper, and safer. FinTech has also been defined as using digital technologies to enable financial markets and payment systems. In essence, FinTech is about using emerging information and communications technologies (ICT) to improve the way financial services are provided.

 

A simple definition of FinTech would be to look at how we use technology to create new ways to do things. For example, if I were to ask what was an example of a FinTec? One could say, “Well, let’s take Bitcoin! A cryptocurrency that is decentralized and does not require a third party to verify transactions.” However another person might argue that a smartphone app (a FinTech!) is an example of a technological advancement that has allowed us to conduct our daily lives more efficiently, safely, and conveniently.

 

So what makes FinTech different than regular tech? Unlike traditional tech, FinTech focuses on the creation of products and services specifically designed to serve a need within the financial sector. Some examples of FinTech tools can range anywhere from online banking apps to mobile phone payments. While some FinTech companies focus solely on developing their own specific product, others provide software platforms that give anyone access to develop their own FinTech solution.

 

In short, FinTech helps us live our everyday lives while still providing a safe and convenient method for conducting business.

 

• Lending - lending money at a lower rate than banks

        - Example: Prosper Marketplace

 

Deposit Takers - receiving deposits from customers...

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