FinTech stands for financial technology, which emerged in the 21st century. It basically describes the use of technology to provide financial services and products to consumers. Financial technology enables companies to manage important aspects of their business, including processes, business models, software, and applications. It seems that FinTech is very popular nowadays. This is indeed surprising considering that not long ago finance and technology was almost, but not entirely ignored. The reason why this innovative technology is well-liked is that it makes people’s lives easier, resulting in time and cost savings. If you would like to find out more on the subject, keep on reading.
Where does FinTech come from?
It’s unreasonable to assume that financial technology came out of nowhere. The new technology and innovation have been around for quite some time in the financial sector. What you need to know is that it has a long history. In the 1950s, credits cards were introduced, so it wasn’t necessary anymore to carry around cash. ATMs quickly replaced tellers and departments in the 1960s. Stock trading took birth in the 1970s. Years later, after a decade, computers and intelligent record-keeping systems were introduced. In the 1990s, we were introduced to the Internet. The most important moment in time, however, is the financial crisis of 2007-20008. After the financial crisis, FinTech came to the scene.
Attention needs to be paid to the fact that financial technology has only just started to develop. Compared to other forms of technology like the Internet, fintech is very much in its infancy. There’s no doubt about that. Financial technology has the potential to achieve great success. Those who contribute money to make money right now are likely to make a substantial profit in the time to come. Businesses looking to reimagine themselves digitally need to embrace openness, collaboration, and venture investing. It’s true that all of this disrupts the business model, but it’s impossible to ignore the fact that FinTech industry continues to grow at an alarming rate.
How blockchain stimulates the growth of FinTech
If you haven’t been living under a rock, then you certainly understand what blockchain is. What’s more, you can understand the concept of blockchain technology. Just to refresh your memory, the blockchain, which emerged from digital currency, is a virtual ledger of economic transactions. Since it’s stored anonymously, the digital ledger removes the need for a single central body. What happens is that the stakeholder checks every block and nobody from the exterior can mess around with the chain. As mentioned earlier, the FinTech industry is experiencing significant growth. It appears that blockchain technology has something to do with this progress. Blockchain technology has changed the way in which organizations in the financial world operate.
Online payments represent less than 1 percent of the total market for global payments. The thing is that the percentage is rising and it doesn’t show signs of slowing down. Digital assets are reinventing current financial structures, while at the same time bringing together millions of people without an account. Financial institutions are already offering complete digital products, but there is one tiny problem. We’re talking about identity. More specifically, FinTech innovators have a problem with the deployment of physical channels. It’s a good thing that there is the blockchain. Owing to this technology, it will be possible to solve the identity issue. Blockchain and identity go hand in hand. With this technology in place, it’s quite easy to trace transfer information once the money is converted into physical currency.
The fact is that blockchain provides users and companies in financial technology a safe place where they can share information and realize data transfers. Implementation of blockchain technology in fintech will only result in enhanced security. It’s important not to forget about the reductions in cost. Given the elimination of the middleman (in this case the bank), businesses can send the good directly to the final customer. It is believed that companies can save millions. Nonetheless, everything relating to this subject will be of no importance if blockchain technology isn’t adopted at an industry level.
Active investors in FinTech
Someone who doesn’t operate in the FinTech industry has no idea what is going on there. Traditional finance companies and startups are the most active ones. They are behind a great number of deals. As you can imagine, these players aren’t like the usual ones. Not only do they offer targeted solutions, but also they are headquartered in places especially developed to help technology companies. Examples include San Francisco, New York, etc. Investors are based in the US, UK, Germany, Sweden, and Switzerland. And Singapore Undoubtedly, there are other names worth mentioning. All of the investors have experienced good performances, some being more successful than others. By the way, anybody with a great idea can join in.