In 2019, people have witnessed the emergence of fintech; yet, a few days into 2020 and many are still unaware of what fintech means.
Financial technology, fintech for short, refers to new processes, products, and applications in the financial industry; they are used to streamline business processes and services offered to consumers.
In a nutshell, fintech is a new form of technology that aims to enhance and automate the use and delivery of financial services.
Fintech has managed to impact and branch out to other markets and sectors as well due to the increasing number of new digital platforms and solutions being introduced. These include investment management, retail banking, education, non-profits, and numerous others. Cryptocurrency remains the most popular sector that benefitted from fintech; it has garnered most of the headlines last year, particularly when the use of Bitcoin became so widespread.
Ever since the Internet was introduced, fintech has thrived; mainly due to needing only a handful of human workers. New financial activities came into view as a result of this, such as money transfers, online deposits, raising money for a startup firm, and managing investments online.
Now, fintech is forecasted to expand even further with a huge impact on areas such as insurtechs and smart contracts. In terms of smart contracts, the use of computer programs would likely increase, automating the execution of contracts between buyers and sellers. Insurtechs, on the other hand, are expected to leverage new technology to either streamline or simplify the activities in the insurance industry.
Other areas that benefitted from fintech (and would probably continue to do so) include cryptocurrency, robo-advisors, unbanked services, open banking, and blockchain technology.
Financial services remain the most popular sectors in the world and the most heavily regulated as well. When technology and financial services first merged, many businesses tried to take advantage of this new trend — hence why regulatory problems for these companies increased.
Industry experts concurred that it was difficult to formulate and implement solutions to these problems. The government used existing regulations and also customized some of them to properly regulate the fintech sector. Moving forward, it’s more than likely that they will continue to do so since modern problems require modern solutions.