Financial technology (Fintech) is used to describe new tech that seeks to improve and automate the delivery and use of financial services. At its core, fintech is utilized to help companies, business owners and consumers better manage their financial operations, processes, and lives by utilizing specialized software and algorithms that are used on computers and, increasingly, smartphones. Fintech, the word, is a combination of “financial technology”.
Fintech now describes a variety of financial activities, such as money transfers, depositing a check with your smartphone, bypassing a bank branch to apply for credit, raising money for a business startup, or managing your investments, generally without the assistance of a person. According to EY’s 2017 Fintech Adoption Index, one-third of consumers utilize at least two or more fintech services and those consumers are also increasingly aware of fintech as a part of their daily lives.
Within the financial services industry, some of the used technologies include artificial intelligence (AI), big data, robotic process automation (RPA), and blockchain.
Artificial Intelligence is a blanket term for many different technologies. In terms of the “fintech” industry, AI is used in various forms. AI algorithms can be used to predict changes in the stock market and give insight into the economy. AI is used to provide insight on customer spending habits and allows financial institutions to better understand their clients. Chatbots are another AI-driven tool that banks are starting to use to help with customer service.
Advances in technology means consumers can also invest over the internet on an “execution only” basis without any face-to-face interaction. In time, you may be able to get automated financial advice or “robo advice” with little or no human interaction.
- Speed and convenienceFintech products tend to be delivered online and so are easier and quicker for consumers to access.
- Greater choiceConsumers benefit from a greater choice of products and services because they can be bought remotely, regardless of location.
- Cheaper dealsFintech companies may not need to invest money in a physical infrastructure like a branch network so may be able to offer cheaper deals to consumers.
- More personalised productsTechnology allows fintech companies to collect and store more information on customers so they may be able to offer consumers more personalised products or services.