While transferring $10 to your friend via google pay in a matter of seconds, have you ever wondered that you are experiencing a revolutionary change? Finance industry was not like that until the emergence of technology. It is an ever changing and emerging industry that has changed the way we have looked at finance.
Understanding FinTech
Fintech, short for “financial technology,” is basically applying technological advancements to products and services in the financial industry. It is quite evident that technology has helped to enhance and automate the financial services from businesses to individuals. This blog will put light on the FinTech world and how it’s being used.
FinTech began to flourish in the 1990s when the internet and e-commerce business models arose and in the following decade banking in most parts was already completely digitalized. With the emergence of increasing smart devices, the finance industry is making it easy and efficient for the public to avail financial services such as internet banking, stock trading, cryptocurrency, borrowing and investment services. In order to keep pace with the latest technologies, conventional financial institutions need to adapt themselves to survive. FinTech, hence has disrupted the traditional financial & banking industries and potentially poses a threat to traditional, brick-and-mortar banks or financial institutions. Though it is still an emerging industry, fintech investments rose to $59.8 billion in 2019, more than double of the $26.7 billion in 2017 in the US.
“Financial technology is applying technological advancements to products and services in the financial industry.”
FinTech in Practice
As discussed above, technology is a major part of the financial industry from its day to day activities to major services and decision making. Technology has integrated with all aspects of financial industry. This advancement has its own pros and cons. On one hand it helps in generating more wealth by reducing the cost of working with money, on the other hand it has resulted in many job losses due to automation. Although Fintech has led to more transparency in finance practice, it has also destroyed privacy. For example, when you use an app like Lyft or book an Airbnb, you are generating mass information for the company for their internal analysis or decision making. The most used technologies include artificial intelligence (AI), big data, robotic process automation (RPA), machine learning and blockchain.
From business to consumer perspective, some of the most popular practices are:
- Money transfer
- Online bill payments
- Stock trading
- Artificial Intelligence (AI) virtual assistance
- Automated claims processes of insurance
- Online lending and credit platforms
- Robo advice
- Insurance
- Cryptocurrency and block chain technology
From the internal company perspective, some of the most popular practices are:
- Data tracking, analysis and visualization
- Underwriting, Pricing & Credit Risk Assessment
- Data protection and cyber security
- Human resource management
- Book-keeping, budgeting and report generation
- Asset management
Above are just a few examples. Technology in finance has undoubtedly enhanced the efficiency of any business by many folds. Companies can easily handle large data files for analysis and effective decision making. In my upcoming blogs I will talk about how various software can help us ease financial data analysis and visualizations for effective decision making.
