FinTech

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FinTech

Fintech is a portmanteau for “financial technology.” It’s a catch-all term for technology used to augment, streamline, digitize or disrupt traditional financial services.

Fintech refers to software, algorithms and applications for both desktop and mobile. In some cases, it includes hardware, too—like internet-connected piggy banks. Fintech platforms enable run-of-the-mill tasks like depositing checks, moving money between accounts, paying bills or applying for financial aid. They also facilitate technically intricate concepts, including peer-to-peer lending and crypto exchanges.

Businesses rely upon fintech for payment processing, e-commerce transactions, accounting and, more recently, help with government-assistance efforts like the Payroll Protection Program (PPP). In the wake of the Covid-19 pandemic, more and more businesses are turning to fintech to accept contactless payments or adopt other tech-fueled advancements.

How Does Fintech Work?


Fintech provides people and businesses with access to traditional financial services in innovative ways that previously weren’t available. For instance, many conventional banks’ mobile apps now offer customers on-the-go access to bank services, including the ability to view your balance, transfer funds or deposit a check. Meanwhile, robo-advisors like Betterment are less costly and more convenient than in-person investment advice from a financial advisor.

Fintech also automates many services businesses use, such as loan underwriting and real estate appraisals. Artificial intelligence combined with massive troves of consumer data helps fintech businesses understand their customers and powers their marketing campaigns, product development and underwriting.

Fintech and New Tech


Of all the technologies that have impacted financial services, the distributed ledger technology that underlies blockchains and makes cryptocurrencies possible is arguably the most significant. But lower-profile emerging technologies may be even bigger influences down the road. Some of the most intriguing include:

  • Internet of Things. ATMs that can detect how many customers are in line are a good example of this, as are sensors that enable contactless transactions.
  • Augmented reality and virtual reality. Virtual stock trading is one potential use for these still-emerging technologies.
  • Smart contracts. Contracts that can automatically execute when certain conditions are met can improve security, increase efficiency and lower the cost of transactions.
  • Bots. Also known as robotic process automation, these programs to automate repetitive tasks can free up humans from routine work, enabling them to focus on more valuable activities.
  • Voice-enabled payments. Smartphones with voice recognition software let people check balances, transfer money and complete purchases simply by speaking.
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