FinTech started to thrive in the 1990s when the Technology and e-business models emerged, and by the following decade, most banking had been completely digitalized. Following the 2008 Global Financial Crisis, when many people lost trust in traditional financial institutions, security and transparency have become more essential than ever.
This shift in mindset, combined with cloud computing technology, enabled the development of new customized solutions and standard procedures such as providing access to banking profiles, payment, and money transfer in automatically renovated currencies. Now, what is a Fintech startup?
Fintech (Financial Technology) refers to software and other modern technologies that are used by businesses to provide automated and improved financial services. Rapid and innovative advancements, such as Mobile Payments, have altered the way we manage our finances.
Tech-savvy customers, particularly Millenials, expect money transfer, lending, loan management, and investing to be simple, secure, and scalable, ideally without the assistance of a person or a visit to a bank.
Established bank products are increasingly being displaced, and banking has largely become more convenient, efficient, and easy to access for both businesses and customers. When it comes to implementing new services based on changing demand, FinTech startups operate more flexible and quickly than traditional banks.
What are some examples of fintech startups?
1. Payments via mobile devices
Everyone who owns a smartphone appears to use some form of mobile payment. According to Statista, the global mobile payment market is on track to exceed $1 trillion by 2022. Services, such as the popular payment app Venmo, have emerged that use increasingly sophisticated technology to allow consumers to exchange money and payments online or on mobile devices.
2. Platforms for Crowdfunding
Companies such as Kickstarter, Patreon, GoFundMe, and others demonstrate the breadth of fintech beyond traditional banking.
Crowdfunding platforms enable internet and app users to send and receive money from other users on the platform, allowing individuals or businesses to pool funding from a variety of sources all in one place.
Instead of going to a traditional bank for a loan, it is now possible to seek support for a project or company directly from investors. While their applications range from family and friend funding to fan and patron funding, the number of crowdfunding platforms has grown over time.
3. Blockchain Technology and Cryptocurrency
Cryptocurrency and blockchain are iconic examples of fintech at work.
Cryptocurrency exchanges such as Coinbase and Gemini allow users to buy and sell cryptocurrencies such as bitcoin and litecoin.
However, in addition to cryptocurrency, blockchain services such as BlockVerify help to reduce fraud by storing provenance data on the blockchain. And, while cryptocurrency and even blockchain are somewhat contentious fintech applications, they have certainly taken the investment market by storm in recent decades.
Fintech has even caused havoc in the insurance industry. The term "insurtech" has come to encompass everything from car insurance to home insurance and data protection.
Furthermore, insurtech businesses are increasingly garnering money, with insurance startup Oscar Health obtaining $165 million in funding in March of last year - at a $3.2 billion value, according to CNBC.
Furthermore, Credit Karma, a popular personal finance company, was valued at $4 billion in 2019 by Forbes.
Who are the big players in fintech?
- IHS Markit Digital.
- Spring Labs.
What does a fintech company do?
Fintech firms, in a nutshell, make financial services more widely available. Traditional financial transactions such as saving, investing, and loan applications are among these services. However, it also includes innovative financial technologies such as artificial intelligence and cryptocurrency. With one-third of consumers still not using banks or similar investment firms, fintech startups have a long road ahead to go.
Feb 02, 2022