An amalgamation of terms “financial” and “technology,” Fintech is a new entrant that often applies to any emerging technology that assists consumers/financial institutions in delivering financial services in more unique and faster ways than what was traditionally available.
Earlier, while people were required to go to the bank to request their balance, now they can get this information in real-time on their phones. And this is what FinTech is all about. This evolution of technology allows consumers to go online & see their transactions, offer apps that enable users to pay friends, and tools that will allow the financial institutions to make quick lending decisions.
All in all, FinTech is a technology that empowers consumers to take control of their financial lives, resulting in greater financial literacy and empowerment. It helps advance consumers’ financial situation and outcomes by leveraging advanced technology.
What Is The Definition Of FinTech?
Fintech company stands for any business that uses technology to modify, enhance, or automate financial services for consumers or businesses. A few examples of Fintech companies are peer-to-peer payment services (like Cash App, Venmo), mobile banking, automated portfolio managers (like Betterment, Wealthfront), or trading platforms like Robinhood. It also applies to developing and trading cryptocurrencies (like Ether, Dogecoin, Bitcoin).
These companies incorporate technologies like Blockchain, data science, and AI into conventional financial sectors, making them faster, safer, and more efficient. FinTech is the fastest-growing tech sector where the firms innovate in virtually every finance area, from loans and payment to stock trading and credit scoring.
How FinTech Works
FinTech is not a new industry; it has just evolved pretty quickly. Technology, in actuality, has always been a part of the finance world, be it the introduction of credit cards in the 1950s or electronic trading floors, ATMs, personal finance apps, or high-frequency trading in the following decades. Nowadays, the newest finance technologies use blockchain, machine learning (MI) algorithms, and data science to process credit cards and run hedge funds.
What Are The FinTech Trends For The Year 2022?
Over the years, FinTech has evolved as per the development demands into the broader technology sector. In 2022, the FinTech growth is defined by various prevailing trends, like:
In personal finance, consumers increasingly demand easy digital access to their bank accounts, particularly mobile devices. Today, most big banks offer mobile banking functionality. Neobanks are mainly banks with no physical branch locations and serve customers with savings, payment services, and loans on mobile & digital infrastructure. A few examples are Varo, Simple, and Chime.
2. Blockchain & Cryptocurrency
FinTech came into existence simultaneously as Blockchain and Cryptocurrency. While Blockchain technology enables cryptocurrency mining, the evolvement in cryptocurrency technology is attributed to both FinTech and Blockchain. Meanwhile, cryptocurrency and Blockchain are technological trends that are used even outside the realm of FinTech, but they are both needed to create useful apps that take Fintech forward. Few significant Blockchain firms are Circle, Spring Labs, and Gemini, whereas the examples of cryptocurrency-focused firms include SALT and Coinbase.
3. Savings & Investment
FinTech led to the introduction of numerous investing and saving applications in recent years. Firms like Acorns, Stash, and Robinhood are revolutionizing the concept of investment. Each of these apps uses a combination of savings & automated small-dollar investing strategies, like instant round-ups on purchases, to introduce consumers to markets.
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4. Trading & Machine Learning
Machine Learning plays a crucial role in the FinTech industry. This AI-sublet (artificial Intelligence) can run vast amounts of data via algorithms to spot risks and trends. Hence, it enables consumers, banks, companies, and other enterprises to understand investment better & purchasing risks much earlier in the process.
FinTech is great with moving money around, and we have Venmo, for example. While earlier people used to say “I’ll pay you later,” it has been replaced with “I’ll Venmo you.” Payments companies like Venmo, PayPal, Zelle, Square, and Stripe have changed the way people used to do business. Today, it has become much easier to send money anywhere across the world digitally.
FinTech also overhauls credit by streamlining risk assessment, speeding up the approval processes, and making access easier. Today, many people across the globe can apply for a loan on their mobile devices, and the new data points and risk modeling capabilities expand credits to underserved groups of people. Also, the technology enables consumers to request credit reports many times a year without affecting their score and makes the whole backend of the lending world more transparent for everyone. The few famous credit firms are Credit Karma, Petal, and Tala.
InsurTech will soon become its industry; however, it comes under FinTech. FinTech startups are associating with the traditional insurance firms to help automate processes & expand coverage. The insurance industry takes a few innovative steps, such as wearable health insurance. Popular Insurtech firms are Root Insurance, Oscar Health, and Policy Genius.
Is FinTech A Safe Option?
As per a Forbes report, FinTech firms are trusted by consumers. Around 68% of people are enthusiastic about using financial tools created by non-traditional (non-banking, non-financial) institutions. Yet, several fintech apps are new and currently not subjected to the same safety regulations as banks. However, that doesn’t mean consumers can’t trust FinTech firms with their money – instead, it simply implies that it is good to be careful. Also, for most consumers, the benefits outweigh the apparent risks.
What Skills Do You Need To Make A Successful Career In FinTech?
FinTech is a growing field that offers many job opportunities for those with relevant experience and knowledge. These are the essential skills to hone to succeed in FinTech:
Many FinTech firms use mobile apps/websites to widen their reach and increase consumer value. Software developers & programmers are primarily responsible for building and maintaining these FinTech sites & apps and designing them to be efficient, secure, & navigable. The popular FinTech programming languages include C++, Java, Ruby, and Python.
Many FinTech firms are data-driven and connected to vast digital networks that deliver new possibilities & experiences for their users. They offer great value and increase the risk of security breaches and cyberattacks. Hence, it can be beneficial for aspiring FinTech professionals to have a working knowledge of cybersecurity, knowing how to guard the FinTech firms from hackers and other cyber threats.
3. AI/ML and Data Science
FinTech users generate lots of data, and many Fintech firms are using this data to offer personalized services. Big Data is used to manage finances for clients, make financial predictions based on client behavior, and lead to crucial insights that allow for more robust and more informed decision-making. Hence, aspiring Fintech professionals can benefit by having a basic understanding of data analysis.
Artificial Intelligence (AI) and Machine Learning (ML) algorithms are used regularly to process and analyze large chunks of data, enabling companies to generate actionable insights. AI & ML algorithms lower the risks, increase returns, automate processes, and makes predictions for the future. Ambitious Fintech professionals can certainly benefit by being skilled in ML and AI technologies.
It can benefit FinTech aspirants to have a working knowledge of Blockchain architecture and encryption attributes. After all, as mentioned earlier in the article, cryptocurrency is a prominent FinTech sector, and hence the need for Blockchain savviness is much needed.
Meanwhile, FinTech has spawned a growing range of job opportunities for those interested in the field. Few such careers are as Financial Analyst, Blockchain Engineers, Information Security Analyst, and Blockchain Engineers.
This article covered several aspects of FinTech, how safe it is, its trends for 2022. All in all, we can say that FinTech is a major player in the global economy and business landscape, and it is here to stay. So, if you want to develop an app in fintech industry do get in touch with our app development team.