We live in a digital age, which affects many aspects of our lives, including finances, giving rise to financial technology or so-called FinTech. Understanding this tech-driven industry is critical if you want to stay relevant in 2024. It is pretty clear that it has become a worldwide thing with no indications of slowing down in its development.
But where should one begin to understand this important component of modern life? A great resource is Rates.fm – all about finance for learning about the changing world of the financial industry. In this article, you’ll also find useful information and an overview of FinTech, the technology that supports it and the most recent advances in the financial sector.
Said Tech in Brief
The whole idea behind financial technology is to make all aspects of finance a lot easier, or better still, to automate them. As anyone who knows all about finance will tell you, the space is quite broad and encompasses a lot of things that cater to the largest entities, to consumers.
If the idea of FinTech seems foreign to you, chances are that it isn’t because if you’ve used some form of mobile banking service, you’re familiar with the concept.
As it stands in 2024, space has greatly evolved to the point that various technologies, which we’ll get to, have been used to create a host of innovations of varying use according to Rates. The FinTech space is so broad at the moment, that it was worth North of 200 billion dollars as of 2023, with more expansion set to follow.
The Innovations Created
FinTech requires the use of a wide range of technologies. These are very much present in the developments we’ll explore later, and they include things like the following:
- Blockchain technology
- Artificial intelligence and machine learning
- Application Programming Interfaces (APIs)
- Big data analytics
This lucrative space allows thousands of companies to be in the mix and try to get a piece of the pie by using the above tech to create and offer several services and innovations. The most notable among these include:
The Crypto Space
This is arguably the most famous of the innovations on this list, and it uses blockchain technology to remove the intermediary from finance, including tokens such as Bitcoin, as well as NFTs. The industry’s market size as of 2023 was already over a trillion US dollars, and it includes all the applications and platforms dealing in crypto.
A key element of crypto and the blockchain technology that supports it, are smart contracts. These tools exist to automate actions, thus fulfilling their role as part of the FinTech space.
Digital Payments
This is the type that has already been alluded to and is the one piece of FinTech that many use without knowing it if they’re unfamiliar. Through digital payments, often shown in banking, people can avoid the higher fees that come with other methods of payment such as credit cards.
Insurance Technology
Commonly called Insurtech, this area of FinTech aims to make the entire space more efficient via automation. A piece of tech that achieves this is big data analytics, which can allow insurance companies to go through clients’ information and act accordingly quickly.
This very tool is also used for regtech(regulation technology), allowing financial institutions to keep up with the ever-evolving landscape of compliance and regulations in the space.
Robo-Advisors
In the trading space, for example, these can be used to make the best investment decisions. They achieve this through algorithmic means, thus automating the investment process. This process of automation enables users to manage portfolios in the trading space, pick assets, and make transactions using defined criteria, making investing more effective and open to a wider range of people.
P2P Lending
What does peer-to-peer lending do? Does it allow people or entities to lend money to each other directly and without your standard intermediary? What this helps out with is the establishment of lower interest while still offering accessibility to funds.
These are only a few of the many areas that might be categorized as FinTech. If you’re interested in learning more and know all about finances, you should be aware of the following apps:
- In wealth management
- Personal finance management
- Embedded finance in which and non-financial products offer financial services seamlessly
What the Future Holds
FinTech is undoubtedly going to keep evolving going forward, as this is a digital age, but what exactly would that look like? Well, for that, we can look at AI and its role in space. AI will be responsible for really speeding up processes, and its ability to learn makes its uses even broader.
Think of a tool that would help you become more economical. You could decide to do all the complex work of allocation yourself or, through artificial intelligence, have a trained model that’s part of an app to help make a well-informed decision for you.
What Comes With the Territory
FinTech exists on both the company and consumer sides to reduce operational costs while also automating and optimizing operations. Downsides to this tech do exist, though. Because of FinTech’s digital nature, security issues are always concerning, but those are being constantly improved. Then there’s the lack of regulations that allow for scams, something the crypto space, in particular, sees.
Conclusion
FinTech, in whatever form it currently takes and is bound to take, will always be a thing, so it’s only natural that you become aware of the current innovations to make use of them.
Those who know all about finance have the wisdom to do this because they know that the efficiency as a result of automation that FinTech provides could prove useful. This is especially true for the more complex cases such as insurance, wealth, and regulation management.
That said, FinTech and the technologies powering them are not entirely free of issues, as the crypto space has shown. Regardless, because FinTech is here to stay, these problems will be addressed only for a new set to appear and be dealt with once again.
