The term ‘Fintech’ is a play on the words “financial technology.” The phrase refers to the use of technology in financial services. It is often used to describe companies that are using technology to disrupt the financial services industry. Think of it as the evolution of financial software and best practices in the banking industry.
Except, now they are totally next level thanks to modern coding and low cost of technology worldwide.
The idea behind Fintech is to make it easier for people and businesses to access their money, make payments, transfer funds, invest in stocks, and more. This new technology has turned the world of finance upside down. Weather you are applying for payday loans in London, Ontario or a personal loan in Canada, Fintech is here to stay.
A lot of Fintech companies are working on disrupting traditional banking institutions by offering cheaper alternatives for customers who don’t have a bank account or credit card. Like green Fintech is something completely new.
The growth of online banking and the rise of global currencies have made fintech services an important part of the financial industry. Fintech services are software applications that offer digital lending, investments, and other financial tools. Some examples of fintech services are PayPal, Google Wallet, Uber, Amazon Prime.
Some companies like Alibaba and Tencent are looking to compete with traditional banks by offering their own fintech services.
Some of these alternatives include peer-to-peer lending platforms like Lending Club or Prosper and mobile payment apps like Square or Venmo.
History of Fintech
The term “fintech” was first used in 1999 to describe the evolution of technology in financial services. This made it possible for the new tech companies to offer services that were traditionally offered by banks, etc.
Fintech companies are becoming more innovative and are changing the world of finance. For example, they are getting rid of cash and replacing it with digital currencies which is making transactions easier, faster and cheaper.
Looks like Fintech is really taking the world by storm and is now evolving into Fintech 2.0. Especially with Blockchain.
Helping New Economies Grow
The most amazing part of Fintech is the global impact it has has in developing countries.
The development of fintech in Africa has been mainly driven by four factors.
– Development in telecommunications and broadband infrastructure has resulted in a booming market for mobile banking
– Lack of traditional banks and other financial institutions has led to an increase in informal lending
– The high cost of doing business in Africa has led to an increased focus on innovative payment solutions
– The growth of ecommerce and online shopping has created more opportunities for cross border transactions
Thanks to technology developed in North American countries like US and Canada, the rest of the world can now enjoy easier, faster and cheaper banking.
Especially with local Fintech talent, the sky is the limit.
So what is the latest on the horizon right now?
Fintech 2.0 and P2P Lending
Peer-to-peer lending is a form of finance where the lender and the borrower are individuals.
This technology has been around for more than 12 years, but it has only recently begun to be taken more seriously. While some people are still skeptical about this form of financing, it is likely that this type of lending will continue to grow.
The first peer-to-peer lending company was Zopa, which started back in 2005. It has grown significantly since then and now offers loans with less strict credit requirements. The next big player was Lending Club which entered the market in 2007. Since then there have been a number of other entrants on this space including Prosper, SoFi and Funding Circle who entered the space around 2011.
So as you can see, Fintech has many faces and it looks like this is just the beginning.