Fintech is an umbrella term used to describe any new innovation in financial services that attempts to improve the customer experience or make the financial industry more efficient. Basically, fintech include any company that creates a new financial service. They can come from all walks of life, from start-up companies trying to find new ways to process payments, to large financial corporations using cutting edge computer technology and innovative software to reduce processing times and increase customer service.
A good way to think of fintech is to think of the advancements that have been made in technology over the past decade. There are now many new electronic and internet-based services available to businesses of all sizes. The decade’s notable advances in technology include the development of online banking, credit cards, online investing and the adoption of debit cards for making online purchases. If you think about what these services can do, and where they’re headed, it’s easy to see why fintech is such a bright and promising area of innovation for the future.
Because fintech companies don’t focus on a specific industry, there is a wide variety of products and services to choose from. However, there are a few sectors that seem to be attracting the most attention, including the stock market and the pharmaceutical and bio-science industries. These sectors offer several unique benefits to businesses looking to capitalize on the technology. First, they provide a highly visible niche market. Because stock markets and the pharmaceutical and bio-science industries are so dominant in most nations, there is less competition for new companies than there would be in other areas. The result is a wide range of products and services from well-known companies to start-ups with limited financial resources.
Another advantage of this industry is that most of its practices run under regulatory supervision. Regulation also protects new start-ups from being taken advantage of by less scrupulous competitors. This ensures that the fintech industry stays committed to providing quality financial services, while improving customer service and lowering costs.
There are two prominent financial services firms that have entered the fintech arena in recent years. One is Scottrade, which now operate as a full service brokerage firm, and the other is Bank of America, which became the first major bank to offer online banking to consumers in general. Both companies have had varying degrees of success. However, Scottrade and Bank of America have significantly increased their share of the market, especially in terms of new accounts and high-end investments.
PayPal is another company that offers a popular online service to consumers. Although the company is not strictly fintech related, many of its customers are and have become, card users. It is worth noting that many of these card users are actually wealthy individuals who use the PayPal service to pay for things like travel and entertainment. The PayPal fintech opportunity therefore lies in the company’s ability to make its platform accessible and useful to many people, despite their location, wealth status, or age.
Peer-to-peer lending is another area where people can find great opportunities. These types of loans are more akin to the services offered by billers and credit card institutions, but they are conducted directly between individuals, usually using their smartphones. An example of this would be the Lending Tree, which uses real-time photos and data of Lenders who are willing to lend money. The system then matches borrowers with lenders who best fit their needs. Many retail outlets have begun to accept this type of mobile banking, with Apple Pay being the primary service provider.
Despite the fact that fintech startups have yet to truly take off in a big way, these tools are already being used in the banking industry. As the world continues to grow increasingly aware of its impact on the economy, more financial institutions including banks are taking advantage of what technology has to offer. In the end, it could be argued that the growth of mobile banking will serve as one of the biggest catalysts to the continued growth of financial services.