An abbreviation for Financial Technology
A term used to describe the application of new technologies to financial services. The goal is to automate, speed up, or offer new alternatives to existing practices. Originally a lot of FinTech's focus was on back end operations. However, of the last 15 years or so, a lot of the shift was towards the consumer.
An example of where FinTech penetrated to market dominance was with the mortgage industry. Applications took over, offering instant feedback and 24 hours availability. This was something the banks could not compete with. The likes of Quicken Loans and Rocket Mortgage became the leaders in mortgage origination.
Two major advancements spurred the advancement of FinTech adoption. The first was the Internet followed by mobile technology. With the combination of these two innovations, users demanded having their financial tools with them at all times.
Online brokerage services are another example of where FinTech was very successful in disrupting the old models. The fact that trading of equities is now, for the most part, absent commissions is a result of the development in this arena.
Cryptocurrency might be taking this to another level. The introduction of Bitcoin shows the international banks that its ability to control the global monetary ledger might be waning. Innovations such as different blockchains, smart contracts, and DAOs could be the foundation for the next decade of FinTech development.
All of this will likely lead into the further evolution of decentralized finance (DeFi). Services built on top of blockchains have the ability to utilize different decentralized features that exist only in the digital realm.
There are a number of technologies that people feel Fintech will focus. They are:
- Artificial Intelligence
- Big Data
- Robotic Process Automation (RPAs)
In addition to automating processes, we are going to see a lot of data generated and analyzed. This will be done in an effort to understand (and predict) the habits of consumers.
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