Let's see what FinTech is!

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Read Time - 3 mins

Shortened for Financial Technology, FinTech is basically a combination of Financial Services and Technology. As the world is advancing more in the technical field and with such advancements in Machine Learning and Artificial Intelligence, the accessibility and accuracy are growing at an elusive pace wherein we all are left with no other option than to adapt to FinTech.

Emerging in the 21st century, any innovation which in terms is related to Financial Services and is done with the help of technology can be categorized under FinTech. At its core, FinTech can be used by anyone and everyone and if you observe carefully, we all are surrounded by FinTech and it comes into the picture every time you make payment. There are certain categories in the Finance Sector that are adopting to FinTech or have already adapted to it, there are some huge and recent implementations of FinTech at a global level and to talk a few:

  • Bitcoin is accepted by companies such as Apple, Microsoft, Amazon, Expedia, Shopify and many more
  • J.P. Morgan has involved in blockchain and crypto-asset development and the head of digital treasury service and blockchain, Umar Farooq announced in June 2019 to launch JPM Coin
  • Automation of the paperwork that is required for banks to process certain loans and insurances
    • A great example of this is Prodigy Finance - it provides student loans not just by the current credit score but also by calculating the future credit rating of the student i.e. after graduation. The algorithm that works to achieve the aforementioned is something that comes under FinTech thus labeling Prodigy Finance as a FinTech company

Now let's have a look at what all categories are there in the Financial Services sector that is switching to FinTech, the reason we need to see this is, most of us still believe that FinTech starts and ends with Cryptocurrency, however that's not true. FinTech covers a lot of sectors other than cryptocurrency. FinTech startups work on 1 or more of the following categories:

  • Payment processing and network
  • Mobile wallets
  • Retail Investing
  • Financial Automation
  • Capital market and trading
  • Wealth management
  • Core Banking
  • Mortgage Lending
  • Regulatory and Compliance
  • Payroll & Benefits
  • Credit Score Analytics
  • POS and Personal Lending
  • Business Lending
  • Account and Finance 
As you can see that cryptocurrency only makes a share of FinTech and that FinTech comes with unlimited use cases, out of which, only a few are listed above.

With the UK alongside Singapore serving as the backbone of FinTech startups, here is the list of top 5 countries to launch a FinTech startup:
  1. United Kingdom: Annual Revenue £20 billion engaging more than 60k people
  2. Singapore:  $225 million committed to being invested in FinTech startups
  3. NewZealand: It cut down Corporate tax to 28% to promote innovation
  4. Netherland: It has around 350 FinTech startups already contributing to the economy 
  5. HongKong: In 2018, Hongkong committed around $6.5 billion to FinTech domain
As with most technology, removing certain minima and maxima, the age is inversely proportional to the understanding and awareness of a particular technology, the same applies to FinTech. The younger you are and the more you follow this blog, the more likely it will be that you are aware of and can accurately describe what fintech is. Given the huge size and increasing earning potential, the consumer-oriented fintech is mostly targeted toward millennials. It is also believed by some fintech watchers that this focus on millennials has more to do with the size of that segment than the ability and interest of Baby Boomers and Gen Xers in using fintech.

According to EY's FinTech Adoption Index, a third of consumers worldwide are using two or more fintech services and awareness among people for FinTech is also at a great pace. Among those consumers, 84% are aware of FinTech (Last year percent: 68) thus a clear increase of 22%.
The FinTech industry is thriving globally and this is very evident as the investment in the FinTech industry, in last year alone, was approximately $17.4 billion. 

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