When you use PayPal, Google Wallet, your ATM card or even your mobile banking transactions which you do with your mobile phone to make a purchase or receive payment, you, the consumer; the intermediary, ecommerce retailer and the banks behind the money exchange are using FinTech.
And when you go online to find the best mortgage rates for that dream home, shop on online stores, look out for investment options and end up buying or selling your goods and services with the aid of an electronic machine and internet connectivity, you’re using FinTech.
FinTech is the resultant of the word ‘finance’, merged with the word ‘technology’; that is a short form of pronouncing ‘Financial Technology’. Financial Technology is simply the application of technology to financial services and transactions.
Fintech is a very broad sector with a long history. According to Forbes, most people hear fintech and think about the latest mobile app which can help them pay for their morning coffee without ever touching a currency. But technology has always played a key role in the financial sector in ways that most people take for granted and might not ever see.
The 1950s brought about credit cards to ease the burden of carrying cash. The 1960s brought ATMs to replace tellers and branches. In the 1970s, electronic stock trading began on exchange trading floors. The 1980s saw the rise of bank mainframe computers and more sophisticated data and record-keeping systems. In the 1990s, the Internet and e-commerce business models came into operation. The result was the introduction of online stock brokerage websites aimed at retail investors.
After the global financial crisis of 2008, however, FinTech has evolved to disrupt and reshape commerce, payments, investment, asset management, insurance, clearance and settlement of securities and even money itself with emergent cryptocurrencies such as Bitcoin.
“When you think about banks today, they’re nothing far from technology companies. If you look at where they spend their money,” Eric Piscini, a principal in the technology and banking practices at Deloitte Consulting, said. “Customers now expect seamless digital onboarding, rapid loan approvals, and free person-to-person payments – all innovations that FinTechs made popular.
Presently, there is a Paradigm Shift In Money Transaction, it is apparent that the application of technology to financial services and transactions have come to stay; and there’s a need to embrace it. New inventions keep coming in almost on a day to day basis and the scope keeps widening. Globalization and technology have broken through the shackles of manual transactions to usher in digital transactions. The e-commerce boom, the payment wallets, the numerous online services and payments; including the digital currencies which is almost a threat to the fiat currency and it’s operations. The FinTech sector, valued at $33 billion in 2016, is expected to scale up to $73 billion by 2020.