What is FinTech And How Does it Work?

You’ve probably heard the word “fintech” by now, because everyone has. But few people really understand its meaning. However, while we say, “Few people know”, a few people in the world have managed to understand this phenomenon – because it is changing and will soon change our habits, everyday life and our idea of comfort even more. 

Financial Technology

We’ve been using what’s called financial technologies for a long time now.

You’re using the advances of the FinTech industry every time when you: 

• Pay taxes through an online account,
• Go to an online bank, 
• Or buy music on iTunes.

It’s because of the breadth of technology use in finance that it’s hard to explain exactly how FinTech works, but we’ll figure it out!

FinTech and Applications

Let’s start with FinTech in the business field. Last year, FinTech companies earned $17.4 billion in the U.S. alone, and the global revenue share was $84 billion. 

Of course, keep in mind that we’re only talking about startups. If you add to the list companies that are in one way or another connected to government agencies, the amounts get even higher. So, what do these companies do?

• Cryptocurrency and digital currency.
• Blockchain technology, with a decentralized system.
• So-called “smart contracts,” which allow money and data to be exchanged securely without the help of third parties.
• InsurTech – technologies that are used in the insurance industry to streamline processes.
• RegTec (regulatory technology) – technologies that ensure fast and reliable compliance with legal regulations. They are growing in popularity now as various countries are actively introducing legal regulations for FinTech companies, which have to be monitored to ensure they are operating legally.
• Robo-assistants are software algorithms that include different types of investment advice for much less money than real advisory firms.
• Non-banking services that offer services to low-income people who cannot, for one reason or another, get the support of traditional banks or other financial firms.
• Cybersecurity.

FinTech and the Future

Modern technology has amazing potential that can translate into completely unexpected areas. Therefore, it is difficult to say right now what exactly FinTech will be in the future, but it will undoubtedly continue to gain popularity among both businessmen and potential clients. Some of the new FinTech areas that are yet to emerge are already ready to be evaluated by experts:

1. Markos Zachariadis, a professor at Warwick Business School, believes that FinTech companies will work more closely with banks and may try to reform the banking system as such.
2. It may seem strange, but centralized governments are very interested in using decentralized FinTech products such as blockchain. The potential for its application to government structures is limitless. 
3. Jim Rogers, co-founder of the Quantum Fund, promises that all nations will issue their own cryptocurrency in the future.
4. One of the most logical areas of FinTech development is mobile banking. It is growing fastest in countries that have little involvement in the global banking system.
5. According to statistics from the financial publication Raconteur, 32% of the solvent population in South Asia does not have access to the banking system at all.

Thus, modern FinTech companies help solve territorial problems in countries with low access to fintech software development services, greatly simplify the use of banks and provide residents with new opportunities.