Fintech refers to software, algorithms and applications for both computer- and mobile-based tools. In some cases, it includes hardware, too—like smart, connected piggy banks or virtual reality (VR) trading platforms. Fintech platforms enable run-of-the-mill tasks like depositing checks, moving money among accounts, paying bills or applying for financial aid. They also encompass technically intricate concepts like peer-to-peer lending or crypto exchanges.
Banks use fintech for both back-end processes—behind-the-scenes monitoring of account activity, for instance—and consumer-facing solutions, like the app you use for checking your balance. Individuals use fintech for everything from tax calculations to dabbling in the markets, with no prior investing experience necessary.
A key aspect of Fintech is with each innovation comes a potential reduction in cost, not just for businesses, but for the consumer as well. An example is UK fintech firm CashPlus, who with their Payments API (Application Programme Interface) innovation, have been able to potentially save companies 50% on transactions costs normally associated with the banks. This could mean multi millions in potential cost savings overall as the product can process simultaneous payments, saving time and money.
Many online or digital-only lenders can offer same day lending if an applicant is approved, and this is only possible due to the advancements of Fintech. The demand from consumers to be able to get the service they need in an instant is high, with 90% of banks expecting growth in the usage of mobile applications, with an increasing focus on ‘mobile-first’ to be able to reach out to consumers.
The rapid development of Fintech is also helping to bring new opportunities to increase transparency, reduce costs and also make information more accessible. Fintech is helping to ensure that this information is at a consumer’s fingertips.
With speed innovations come the need for tightened security protocols, and Fintech innovations have had their influence on this too. One emerging innovation that follows the lead from the rise of smartphones using the technology, is biometric authorization. Being even more secure than a PIN, using your fingerprint to authorize payments and transactions is the next step in securing digital-only transactions in the future. Both Visa and Mastercard have trialed biometric bank cards in the last year and the signs are positive for future, widespread use.