The word ‘fintech’ has become a fast-growing phenomenon in today’s technology-driven world. Fintech is a type of cutting-edge technology used to deliver financial services. Fintech has attempted to shape the financial sector, particularly the banking business, over the years. The fintech industry has grown to be a multibillion-dollar industry, indicating that the technology is well-liked by millennials and the tech-savvy age. This article provides an overview of fintech’s progress over time, as well as its role in influencing the financial sector through technology such as blockchain and artificial intelligence.
What is Fintech?
The use of current technologies to the services supplied by the financial sector is known as financial technology, or ‘Fintech.’ This can include things like online banking or cryptocurrency like bitcoin. Consumers will find it easier to connect their funds to technology as a result of the technology’s design. Fintech was once limited to the banking sector, but it has since expanded to include a wide range of other uses. It allows an individual to pay his bills or trade stocks more easily with the help of technology. It also ensures that businesses reach out to new clients that they might not have been able to reach earlier owing to their remote locations. In a nutshell, fintech has brought the offline and online worlds together.
Transformation of Fintech over the decade
Fintech isn’t one of those industries that exploded in popularity overnight. The industry as we know it now is the consequence of a number of advancements over time, beginning with the introduction of credit cards, which were designed to alleviate the burden of carrying liquid currency. With the banking industry’s migration to digital services, this became a defining feature. A few years later, ATMs were introduced, and banking institutions began to adhere to more accurate record-keeping practices.
With the introduction of online banking in the 1980s, e-commerce exploded, making it difficult for traditional banking systems, which relied on methods like the telegraph to transmit financial information, to keep up with the new technology because people’s attitudes toward banks shifted dramatically. The majority of financial sector activity had been digitized by the 21st century. One of the key factors contributing to this is the growing number of individuals who have access to smartphones with internet connections, which has made it even easier to conduct online transactions using software and programs like as Google Pay.
The Recent Development in Fintech
To get to where it is now, financial technology has undergone a significant transformation. Initially, financial institutions tried their hand at e-commerce in order to capitalize on the global excitement around the digital revolution. Various financial industries are currently attempting to stay up with the latest technological advancements. From managing a business online to paying bills online, the banking procedure has seen significant changes in the period of technology advancements, resulting in the ‘digital’ becoming the ‘mainstream’.
The financial industry has been attempting to develop partnerships with technologies such as AI and Blockchain in order to minimize costs and risks. Robots are programmed to recognize patterns and navigate, and with the arrival of technologies such as chatbots, it is safe to predict that robots will soon be able to take over the role of the traditional bank teller. Another feature is the development of technology in such a way that it becomes intelligent enough to respond to the demands of customers, forcing businesses to alter their customer interactions based on the context of exchange.
Furthermore, financial institutions must improve their cyber-security to ensure that their consumer base is not harmed. Blockchain as a public ledger (a database that stores data in blocks that are then chained together) will soon be a highly important aspect of the financial sector due to its efficiency and transparency. For financial accounting, KYC verification, and security analytics, a large number of financial institutions now use cloud-based software-as-a-service (SaaS). Regulatory agencies are also attempting to adapt to technology in order to solve potential difficulties.
Fintech Effect on Financial Services
The financial sector’s digitalization has been a revolution. Banking institutions have always been on the lookout for new technology to assist them improve customer service, which is where fintech comes in. Technology has aided in the promotion of innovation and the improvement of efficiency. Their main goal is to improve the financial services given to consumers through customer experience management while also reducing the banks’ need on branches to operate. Apart from the banking sector, fintech has had an impact on the insurance industry, and the days of going in person and filling out papers to claim insurance are long gone. By implementing the KYC documentation process, fintech firms have made investors’ jobs easier.
Online payments via smartphone applications are the most frequent method of payment, and practically every establishment, from a hotel to a restaurant, accepts digital payments, paving the path for the emergence of a cashless economy. Although fintech has enabled the banking sector to streamline procedures, it still has a long way to go before it can prosper.
The ability of humans to adapt to change is at the heart of all technical growth, and fintech is the outcome of one such human trait that stimulates innovation. Fintech and banking have joined forces to help restore the financial sector by assisting both the banking sector and the clients at the same time. They assist in the provision of features that can be integrated with financial platforms via various applications.
The financial system is transitioning to a completely new paradigm that will address everything from digital identification to digital sovereignty. Fintech services, which provide a wide range of financial services, will soon become prevalent in the banking sector and in fintech start-ups. Fintech, on the other hand, will suffer a reaction if the banking sector is disrupted in any way. Fintech companies’ existence has cleared the door for financial inclusion, making banking services more accessible and convenient. If you want to learn more about Fintech, check out our dedicated subsidised fintech courses just for you!