Fintech – The Future of Financial Technology

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Fintech is leveraging advanced digital technology to deliver a wide range of innovative tools and solutions for consumers, businesses and financial institutions. The core of fintech is digitization, but the broader applications include new business models and functions — including predictive behavioral analytics, robotic processing automation and big data analytics — all of which help expediate services for consumers while lowering operational costs for monetary institutions.

While we think of fintech as a relatively recent development, the reality is that advancements in technology have been used by financial services firms for decades to streamline service delivery and reduce costs. For example, ATMs predated the internet and credit cards predated mobile phones, and even more recently, online discount brokerages have hollowed out traditional full-service firms that once charged high fees for trading stock and mutual funds.

The more specific examples of fintech include peer-to-peer lending platforms that connect borrowers and lenders directly without the involvement of banks, home mortgage processes that take minutes (rather than days) and payment apps that link to banking systems to complete transactions. Other innovations in this space include robo-advisors, investment apps and savings apps.

Another significant area of innovation is the use of blockchain, which compresses the title transfer process for cars or homes, money transfers and bank accounts into one step that can be completed in seconds. Fintechs are also working to improve financial literacy with a number of novel tools, apps and programs designed to make it easier for individuals to understand and grasp fundamental monetary concepts like investing and saving.

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