In today’s fast-moving world, consumers and businesses alike are looking for speed, easy access, and efficiency. More people want to use technology in order to complete transactions; this includes mobile devices. It’s not uncommon for people today to use apps and technology to track spending, manage finances, apply for loans, or manage investments. That’s why fintech is important now more than ever.
What is Fintech?
Before we take a look at the specifics, let’s start by defining the term. Fintech is the combination of two separate words, finance, and technology. According to Investopedia, this new term is “used to describe new tech that seeks to improve and automate the delivery and use of financial services.” Fintech helps financial institutions and consumers efficiently manage finances.
Coined at the beginning of the 21st century, fintech used to be specifically for the back-end of systems at financial institutions. Today, there’s been a change within the fintech industry and now companies are more focused on helping the consumer by providing digital financial services. One sector of fintech is the development of cryptocurrencies such as Bitcoin.
Who Uses Fintech?
We’ve seen a mixture of different organizations within the financial industry use fintech; traditional finance companies and startups use it. Traditional finance companies like banks and insurance companies are investing in and integrating fintech into current products and services. Startup fintech companies aren’t like traditional options according to the World Economic Forum. Many of these new companies are based in tech hubs like San Francisco, London, and New York and “they typically offer targeted solutions, as opposed to being one-stop-shops for customer financial service needs.” Some examples of fintech startups include, Transferwise, Lenddo, and Ripple.
How is Fintech Regulated?
Currently, there is no set in stone regulation for fintech and the topic is debated among many. The current regulatory system that’s in place is built for traditional financial institutions that can be easily categorized; i.e., banks, insurers and asset managers. New fintech startups aren’t subject to the same regulations because they don’t operate like normal financial institutions. However, fintech is sparking new conversations about regulation. Time will tell what new regulations arise.