It has become difficult to keep up with everything, thanks to the many buzzwords in the media and on the internet. As a result, many people are left wondering, “what is a fintech?” exactly, even if they know it has to do with financial technology. In this post, we will answer that lingering question once and for all.
What Is A Fintech Exactly?
The idea of a fintech pertains to companies – often financial services or product providers – exploring new financial technologies to create a better user experience. Financial technology, or fintech, is an innovative technology that focuses on automating financial services.
Typical examples are automated investing services, online account registration, etc. For those wondering “what is a fintech,” it depicts any company exploring these new technologies and adjusting its services and product accordingly.
One may wonder why financial service providers would explore the unknown. The landscape has become far more competitive over the past few years. Traditional banks and service providers face stiff competition from neobanks, challenger banks, digital-only banks, and other entities. That evolution is a direct result of society’s changing needs and preferences. Younger generations want convenience but are also more aware of security, privacy, and other necessities.
Pushing Innovation and Automation
A fintech will try to streamline its day-to-day operations, financial operations, processes, and consumer-facing solutions through specialized software and algorithms. It is a complex procedure, even though answering the question of “what is a fintech” is more straightforward.
It is often an innovative company trying to do things differently from established financial institutions. That new approach may not always be visible on the surface but is often experienced through smoother onboarding, lower fees, better communication, etc.
Fintech emerged in the early 21st century and continues to affect today’s financial landscape. Providers offering more consumer-oriented services have gained significant market momentum and continue to turn heads. Moreover, it does not apply to only banking, either.
The answer to “what is a fintech” can also include companies active in education, fundraising, non-profit efforts, or investment management, among other segments.
A Booming Startup Landscape
Financial innovation will eventually affect all service and product providers. Big banks can delay this imminent switch as they have a large enough customer base to keep making money while evaluating new technologies. Other companies will launch as fintech startups and raise funds to bring bold services, products, and ideas to consumers. Several of these startups will also include support for cryptocurrencies like Bitcoin, which remain in high retail demand.
Fintech startups all want to become a possible answer to the “what is a fintech” question. Moreover, they aggressively compete with traditional financial service providers through a nimble approach or serving a more niche market. However, they also differentiate themselves from the rest by providing a faster and better overall service.
Most people trying to figure out “what is a fintech” will eventually find a provider suiting their needs. Fintechs are more accessible to consumers with no or poor credit ratings, people seeking instant short-term loans, etc.
Some argue that fintechs primarily cater to the younger generations, but that doesn’t mean they can’t serve the rest of the population. More competition and better services benefit everyone equally. Every new startup trying to redefine “what is a fintech” can become the next global mainstream financial provider.