Technology has rapidly evolved from needing a full room to run a computer to having it as a pocketable rectangular slab. It has impacted many industries and sectors, and at this point, not utilizing it is simply a stupid decision. Even traditional and age-old sectors of the industry have begun adapting it to a successful extent at that. From medicine to real estate, from education to finance, technology has improved the general user experience and workflow.
Among those that benefited the most is the financial industry. Whereas transactions from years past took days or weeks to process (everyone’s familiar with the phrase ‘ten to fifteen business days’), financial transactions of today can happen with a touch of a finger and be over in five seconds. Technology has aided and melded with the finance industry so much that a new term was born from their allegiance: Financial Technology or fintech.
What is Fintech?
Fintech was born out of the union between finance and technology. It refers to using technology to improve operations or services. Fintech can either be a software that allows users, both client and service provider, a more efficient experience. Or it can be a tool that assists in financial analysis, particularly helpful for traders and economists. In some cases, it can even take the form of artificial intelligence used for fraud detection, compliance to regulation, and other tasks that require high processing power.
Everyday users to the most esoteric of financial professionals utilize fintech in their everyday lives. But how does it affect the average joe? How does it present itself to the consumer end of the spectrum? You’ll be surprised by how much it’s prevalent now.
You’ve probably heard of crowdfunding. You’ve probably even used crowdfunding to take advantage of a cool product and a good deal. If you haven’t yet, then it’s an interesting concept: entrepreneurs with a solid product plan can show their idea to the world and receive funding from those interested. This transcends the borders of nationalities as everything is achieved via the Internet, making crowdfunding popular worldwide. This sudden boom of crowdfunding is all thanks to the innovations derived from fintech.
On the more everyday side of things, among fintech’s most used achievement is the common convenience we commonly call online banking. Just a few years ago, banking still took quite some time and effort. Transferring money still meant going to a bank or an ATM, and finding out your remaining balance still needed at least 15 minutes to achieve, but all of these are but memories now. Thanks to the wonders of modern technology, we can simply access our banking information through smartphones or computers. We can do banking transactions as if we are in a bank as well—transferring money from one account to another, receiving money from someone else, or even making payments to utility bills or mortgage loans. These tasks are very convenient to accomplish now, but they sure weren’t very convenient a few years ago.
Security and Fraud Prevention
When online transactions first started, there was always the fear of fraud. Many people felt like online banking wasn’t secure, that your data might be stolen. They weren’t wrong, as this can happen, but technology has progressed far enough for online transactions to be a relatively safe thing to do. Fintech has developed to the point of being able to instantly investigate whether a fraudulent transaction was made or if online theft occurred. Online transactions are now deemed as safe as physical financial transactions are. Of course, proper precautions must be taken, but it’s not as crazy as one might seem.
Investing was once thought of as something that rich people do. However, as more and more people become financially literate, investments are becoming common. And not just stock market investing, but a myriad of different kinds: mutual funds, forex trading, day trading, etc. Fintech has broken down the barrier of investing that prevented many people from joining in the first place. It has made investing accessible, both financially and literally, as not only the initial required capital to get started the lowest it has been in years, it’s never been easier as well. All you need now is to open an app, interact with the interface provided, and voila! You’re on your way to set yourself up to financial freedom.
Fintech has developed and improved a lot that not only did it make things easier for most people, but it also opened up a lot of avenues and opportunities—especially in investing.