What Is Fintech And How Does It Affect How I Bank?

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What Is Fintech- Think back, for a moment, to your pre-COVID-19 life. In those less socially distanced days, fintech was the unsung hero of your Friday night.

You deposited your paycheck by snapping a photo on your smartphone and uploading it to your bank’s mobile app. You checked Mint to gauge your monthly entertainment budget. At dinner, you and your buddy split the tab using Venmo. Later, you tapped your phone at the bar to pay for a drink with Apple Pay. When it was time to head home, you hopped in an Uber, where you paid for the ride with a stored credit card—or even in Bitcoin.

Even if you don’t realize it, fintech is likely a big part of your personal and professional day-to-day. Ernst and Young’s 2019 Global FinTech Adoption Index cites the adoption rate of fintech as more than two-thirds (64%) globally, up from 16% in 2015. According to the report, three out of four consumers used money transfer and payment solutions last year.

As with many emerging technology sectors, fintech can be an ambiguous concept due to the sheer breadth of tools, platforms and services that fall under its yawning umbrella. If you’re still asking yourself what exactly fintech is, here’s a breakdown.

What Is Fintech?

Fintech is a portmanteau for “financial technology.” It’s a catch-all term for any technology that’s used to augment, streamline, digitize or disrupt traditional financial services.

Fintech refers to software, algorithms and applications for both computer- and mobile-based tools. In some cases, it includes hardware, too—like smart, connected piggy banks or virtual reality (VR) trading platforms. Fintech platforms enable run-of-the-mill tasks like depositing checks, moving money among accounts, paying bills or applying for financial aid. They also encompass technically intricate concepts like peer-to-peer lending or crypto exchanges.

The annual Forbes Fintech 50 compiles some of the hottest platforms on the market worth noting. The 2020 list included companies like Chime, a digital-only bank, and Affirm, a resource for instant, fixed-rate, point-of-sale loans. Stripe also emerged as an investor darling this year, with a $1 billion vote of confidence in the form of funding from Sequoia Capital, General Catalyst and Visa, among others.

Fintech branches off into a number of more granular industries: wealthtech (apps like Wealthsimple, an online investment management service), investtech (like Acorns, which lets users round purchases up to the nearest dollar, investing the change in a diversified portfolio) and insurtech (such as Next Insurance, a mobile-first carrier). It has use cases across nearly every industry, geographical market and business model.

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Article Credit: Forbes