All you need to Know about FinTech

What is FinTech?

FinTech (Financial Technology) is a term used in reference to the financial services sector that has emerged in the 21st century. Originally the term referred only to the computer technology used in the back-end of financial institutions but it has evolved to include all banking innovative and new technological used in the financial sector. Examples of FinTech include mobile banking; cryptocurrencies and smartphones which all contribute to making financial services more accessible to the general public through technology.

FinTech solutions replace or enhance existing and traditional financial services. The term can apply to any technical innovation that improves or replaces how transactions re made from double-entry bookkeeping to the introduction of digital money. FinTech is also used to describe any application of technology in the financial sector or in financial management of a company including business models, software and applications.

Is FinTech New?

Although FinTech has been around a while it really took off following the global financial meltdown of 2008 when we saw traditional ecommerce providers being developed and replaced by more effective FinTech services. As Internet and mobile technology has developed so has FinTech. Those in the financial world from banks and insurers to wealth and asset management companies and Forex traders can look upon FinTech as a disruption or use it to their advantage. The smart banks, insurers and other financial businesses have invested in FinTech startups; integrated FinTech into their existing systems; introduced FinTech services and even established their own in-house FinTech incubators.

So what industries are considered as FinTech?

Applications of FinTech:

Cryptocurrencies and Digital Money – Blockchains and other forms of Distributed Ledger Technology (DLT) let us keep a record on a decentralized computer network of cryptocurrency transactions. With the use of DLT transactions with money in digital form (e.g. Bitcoin, Ethereum) can be streamlined with transparency; speed; and reduced risk or error. Read more CryptoCurrency license

Insurance Products – It is becoming more and more common for insurance products to be tailored to the customer’s needs. With the use of FinTech the insurance products can be location-specific; time-specific and more. Insurance providers are also using FinTech to gather and analyze information about their clients so that they can offer what is needed and wanted.

Electronic Money Institutions (EMIs) – EMIs are now offering the same services as traditional banks but in addition they use cutting edge FinTech to upgrade the client’s experience. With the use of FinTech EMIs are making banking more user-friendly and technologically sophisticated. Read more on Electronic money bank accounts

Virtual bank accounts – another form of Electronic Money Institution service and application. The EMIs services or products can be a virtual bank account.

Artificial Intelligence – AI employs FinTech to make traditional financial services more efficient and accurate. Using AI technology businesses can provide automated customer support; virtual financial assistants; predictive analysis of financial trends; more accurate decision making by management thanks to analysis of data; fraud detection will be easier and more.

Cybersecurity – With today’s decentralization of data storage and prolific use of virtual means to conduct business cybersecurity has become essential to guard against cybercrime and protect privacy. This has led to cybersecurity being an integral part of the FinTech industry. Datasecurity systems must be built into FinTech companies from their inception to avoid being vulnerable to cybercrime. Biometrics is one example of FinTech in the cybersecurity field. Biometrics is already used by billions of people for authentication and identification when making financial transactions.

Regulation Technology – RegTech uses FinTech to assist financial service companies comply with regulations, specifically in relation to anti-money laundering and KYC.

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FinTech; Traditional Banking and Electronic Money Institutions

Electronic Money Institutions (EMIs) are an important part of FinTech and more and more EMI startups are joining the market. With the increased number of EMIs to choose from it is important to differentiate between the various technological capabilities of the more established and forward-thinking EMIs. Some EMIs offer state-of-the-art FinTech including apps, online options and mobile solutions. Licensed EMIs have an advantage over traditional banks as they can offer a full spectrum of FinTech solutions and services to both business and private customers.

Is FinTech Changing International Banking?

The banking industry has changed a lot over the last few years; it has become more diverse, competitive and reliant on technology. Banking continues to evolve with innovative advances in technology and changing regulations. Only banks that have embraced new technological advances have survived while other banks that have taken digitalization lightly have been left behind. In addition we have seen the emergence of new non-traditional providers. The impact of these challenger banks and FinTech companies on traditional banks has only really become apparent recently. Research by Accenture shows that these new providers have captured over a third of new revenue in the UK.

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