Fintech means financial technology and is derived from the words finance and technology. It is one of the emerging markets of technology that helps both the consumer and the financial institution in delivering financial services. With the rapidly evolving financial needs, changing preferences, and lifestyle of the consumer, fintech was born. It is easier, convenient, simple, and quicker for the consumers to operate their finances from anywhere without a need to physically go to the bank as they can operate their finances using their mobile phone. So, all the technology and mobile banking services, mobile applications, and e-wallets that have made our financial lives easier come under the fintech industry.
Everything from paying for any services or goods using your mobile phone apps, checking account balance, paying or transferring money to a friend from anywhere anytime, financial planning, insurance, choosing, buying and checking stocks, and maintaining portfolio to virtual currencies, all is fintech.
With the emergence of the fintech industry, the consumer is now more aware of their finances and is taking charge of the same as it has empowered them with financial literacy by breaking the old and traditional financial methods.
Some of the technologies used by fintech companies are artificial Intelligence (AI), Big Data, Robotic Process Automation (RPA), and Blockchain. AI is one of the important technology for the fintech industry. AI and big data technology help the company in understanding the customer and market behavior allowing them in understanding their needs better, create better strategies and experience for their customer, and also helps detect fraud. RPA helps in automating the repetitive financial task more efficiently e.g. accounts payable. Blockchain helps in doing financial transactions without physically going to the bank i.e. digitally and in a more secure way.
This is a multi-million dollar industry that has changed the economies around the world. India and China are two economies that have the largest customer base for this industry. With more than half of the population here uses the digital methods of payments and fund transfer because these countries have the largest population of young people who prefer modern, digital, and hassle-free methods of payment and financial systems.
The industry has grown exponentially over the past decade with more and more new technologies, product and service innovations being done, which are also redefining the financial processes. By 2022, the growth will likely continue and the market value is expected to reach a valuation of $300 billion dollars approximately.
Some of the most valuable fintech companies worldwide are PayPal, Ant Financial, Stripe, Adyen, Coinbase, Square, Klarna, NuBank, and Paytm.
Fintech is a growing industry with infinite opportunities for growth and improvement for our financial systems. With COVID-19 happening, the need for digitization and cashless payments for essential goods and services and to do things at the convenience of our home has increased even more and it will persist in the future as they desire for convenience will grow only and hence the scope and future of fintech is bright. Also, it will help those people come closer to the financial institutions that earlier were not there in the traditional banking system. So, fintech will be the one-stop solution for all our finance-related needs but there are some problems that still need to be solved e.g. hacking, transaction security, fraud, and data security.
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