The term FinTech is a portmanteau. It is actually two words, “financial” and “technology” that come together to form FinTech. As the two parts of the term suggest, it is a piece of tech that is helping the financial industry. It is, in fact, an emerging piece of tech that has helped make the world of banking a better place during this era.
The Emergence of FinTech
The term first emerged a few years before this decade back in 2008. Back then, it was a term that would denote the back-end functionalities that would enable banks to serve their customers. So, in a nutshell, it would go on to denote the technology that the world of financial service providers would use. However, since then, the definition of FinTech has been evolving and expanding. So, the definition of FinTech in 2017 will not be the same as the one in 2018.
One should note that the definition is not changing, it is expanding. New features and information are being added to it every day so that people have a comprehensive understanding of this term.
For example, in 2008 FinTech meant the tech used to power back-end structures of banks. In 2017, FinTech included innovations in this field like crypto-currency. Expanding the definition of new products is a good way of going about it. It gives people the idea of what exactly FinTech is doing. It also lets people know what developers are using it for.
So, in a way, the term falls short of what it is supposed to convey. To a layman, it might just mean technology used in the financial sector. But, it is much more than that. It includes the entire ecosystem of the financial sector and the different functions of every piece of tech and its impact on the industry and its clients. FinTech gives you an idea of the bigger picture rather than the smaller one. It is not just a piece of tech. It is a revolution that is changing the very nature of financial services.
Why It Keeps Expanding
FinTech has had a great impact on the global economy and thus it is not just limited to financial services. It is dynamic in nature even though the term itself is a very static one. So, the definition of this term goes beyond just mere wordplay. While it might have been a static definition at first on the basis of the wordplay, now it is much more dynamic much like its nature.
If you consider what experts have to say about FinTech, you will be able to understand why there is so much focus on FinTech being such a dynamic object.
- First of all, FinTech is a process that boosts efficiency, accessibility as well as profits.
- Secondly, it has created an ecosystem that promotes and aligns public and private gain through insurance tech and health tech.
- It is helping create more space for startups by providing investment.
- It has helped create an entirely new financial infrastructure.
- FinTech has reduced operating costs and helped remove inefficiencies.
It has extended its services beyond simple banking. This is what is more important in this day and age. A few examples of such extensions would be Regtech or regulatory technologies, Wealthtech or wealth management technologies, Insurtech or Insurance technologies and so on and so forth. It has also gained momentum in banking subcategories like lending, student financing, robo-advice, blockchain, SME, etc.
Thus, FinTech is going beyond the so-called financial space and making radical changes. It is not only helping the business, but it is changing it. It is allowing people to access services in a completely new way. So, in a way, it is changing how people interact with financial products. It is analyzing data with the help of artificial intelligence and taking informed decisions. This is something that is helping both parties.
While companies can serve customers better with the help of machine learning and AI, they can also improve their own internal processes. On the other hand, customers too can analyze their habits using this piece of FinTech.
FinTech is breaking all barriers and creating a new space in society. There are apps out there that reward you with cryptocurrency depending on the number of steps you take. So, you can very well understand what an impact FinTech has on the world and what it might have in store for the future. Every month, something new becomes a part of this revolution. So, the definition keeps expanding to include everything related to it. It is a wave of digital transformation that is here to stay, and only time will tell what more changes it will bring about.