Understanding the Fintech
The increase growth in the field of technology has led to a rapid increase in various business platforms. One of the sectors that is a beneficiary of this growth is the area of finance. Information technology has led to the growth of financial technology. Financial technology is a new mode of access to and delivery of financial services as opposed to the traditional methods of banking. Fintech has taken over the field of finance through the introduction of modern less cumbersome, and exciting services such as the mobile wallets systems, crowdfunding, peer-to-peer lending, mobile banking, commodities exchange, cryptocurrencies, and forex trading with platforms like SpotOption.
New funding methods
Financial technology has introduced a new system of access to funds. Peer-to-peer (P2P) lending is one way in which people borrow and loan money without use of any financial intermediary. In addition, people are now accessing funds through crowdfunding. Crowdfunding is a method where people raise funds for a particular project through contributions from friends, customers or even investors that might be interested in the idea. Crowdfunding is being actualized through social media platforms and crowdfunding networks such as Crowdcube, Kickstarter and CircleUp. Currently, the main types of crowdfunding are equity crowdfunding and reward-based funding.
Cryptocurrency is a decentralized digital exchange that mainly uses enciphered or coded computing language in order to come up with digital coins that can be independently used for transacting aside from the conventional government currencies. These digital cash currency that is ever increasing include Bitcoin, Ethereum, Litecoin, Ripple, among others. Transactions in cryptocurrencies are mainly carried out through blockchain technology. The blockchain tech is like a bank where traders of cryptocurrencies are registered. However, information in the Blockchain platforms is encrypted as opposed to banks and hence members’ details are anonymous. People are also trading in cryptocurrencies just like traders in the stock and forex markets.
Mobile banking is an innovative mode of transaction where individuals and businesses transact through the use of mobile phone applications. This has been seen through the use of smartphones, tablets and even smartwatches to make payments for goods and services.
Users of Fintech
Fintech has attracted a lot of people both as individuals and also as businesses. The first approach is the B2B where banks are now transacting with other banks and institutions. Different organizations have also subscribed as clients to many Fintech companies. Additionally, Fintech is being used to connect businesses with consumers. However, the highest number of users are the consumers who transact against each other and continue to enjoy the advantage of direct transactions without any links such as banks.
Key players in the Fintech industry.
There are many players that are entering the Fintech industry. This is mainly due to the ever changing ever increasing products being availed in the Financial Technology industry. The current major areas in Fintech industry are the areas of mobile banking, Payment processing, cryptocurrencies, mobile wallets, alternative lending and automated investing services. Companies that are offering these services in the Fintech market have become key players in the financial industries. Such companies include Venmo, PayPal and Apple Pay have become key players in providing suitable and secure payment mechanisms. Fintech Lending is also being enhanced by companies such as Lending Club and Prosper. In the field of automated investment Betterment and Wealthfront are providing surging services. Companies such as Stripe, SoFi, GreenSky, and Credit Karma are redefining the field of Fintech in America. Other fields such as Insurtech which involves insurance technology are also growing rapidly.
The future of Fintech industry
Trends in the current market have indicated that the financial technology is disrupting the field of finance. The global fintech hit $19 billion in 2015 with $15 billion by mid-August in 2016. This growth trend shows higher embrace rate in fintech and hence the future of finance is likely to be defined by Fintech.