Financial technology, or fintech, is the application of software and other technologies to the financial services industry. It can include everything from robo-advisors to mobile banking and P2P lending. These innovations have expanded financial inclusion and cut operational costs, among other things.
The term “fintech” has become a buzzword in recent years, with startups receiving billions in venture funding (and some becoming unicorns) and incumbent financial firms either snatching up new startups or building their own fintech offerings. Some of these offerings are disruptive to traditional financial services firms, while others are aimed at improving existing processes and products.
A common characteristic of fintech is that it aims to cut out middlemen and connect directly with consumers or businesses. For example, buy-now-pay-later services like Affirm bypass credit card companies when financing purchases. Fintech is also revolutionizing how loans are made, with new platforms connecting borrowers and lenders without the involvement of a bank. These innovations often rely on blockchain, a distributed ledger technology that compresses records into one digital file.
Other fintech applications improve efficiency, increase transparency and reduce fraud. These include artificial intelligence, which has widespread applications in digital banking. Robotic advisors, for instance, use algorithms to help people plan their investments and manage their money. They can be especially helpful to people who don’t have much experience with investing or who are too busy to seek out a human adviser. Open banking, a system that allows third-party companies to access financial data, is another way that fintech can streamline and automate financial processes. https://greyjournal.net/hustle/work-tech/navigating-the-new-challenges-for-fintech-startups-in-a-changing-economic-landscape/