Short for “financial technology”, fintech refers to the innovative new technology that is being designed to try to improve how financial services are delivered across the board. For consumers, new technologies in the financial services sector aim to simplify processes and make managing your finances easier. This includes everything from new ways to shop for short-term loans to apps to help you budget.
Increasingly, when people use the term “fintech”, they are talking about the financial services that you can conduct (normally without human involvement) on your tech devices, such as your smartphone or your computer.
Fintech is nothing new
The financial services sector has always been at the forefront of technological advances. Credit cards, for example, were developed many decades ago, in the 1950s.
Online banking, allowing us to manage our money from the comfort of our own sofa, has been around almost as long as we’ve had the internet in our homes.
As smartphones came into usage at the beginning of the 21st century, we’ve seen an increasing amount of apps available to manage everything from payments to loans.
Interestingly, when the term “fintech” was originally used, it referred to the technology used by financial institutions. Now, it is mainly used to refer to technology aimed at the consumer, like the financial-focused apps you can use on your smartphone.
Fintech could help to save you money
Having your own financial advisor in your pocket could help you to budget better and invest wisely. As an increasing number of apps appear to help you to do just that by, for example, providing insights into your spending and prompts to remind you to pay bills, you could find that managing your finances becomes much easier – as you’ll essentially leave it to the technology to do it for you.
Traditional banks may be replaced
As more people turn towards technology start-ups to replace what their bank would normally do, it could be that traditional banks will no longer be necessary. One expert described banks as being “under attack”. However, banks are responding to these digital threats in various different ways, with, for example, DBS launching their own digital banks.
Loan applications could become even quicker
As the delivery of financial services becomes increasingly automated, applications for finance could become even quicker and access to credit in general, simplified.
Fintech: it’s here to stay
New technology, aimed at consumers wanting a better and/or easier way to manage their finances, is being developed all of the time. While there are still many questions surrounding privacy and data security, on a whole, fintech should hopefully have a positive impact on consumers.
Our smartphones are becoming an extremely powerful tool to help us to stick to a budget and hit our savings targets. The simple truth is, that any technology that can make our lives easier, is probably always going to be a hit. With many apps not only aiming to make it easier to keep control of our finances but also actively offering us tips and insights on how we could alter our spending to better suit our circumstances, fintech is likely to go from strength to strength.