The term "FinTech" is a combination of the words "financial" and "technology." It refers to the use of technology in the financial sector, specifically in the areas of banking, payments, investments, and insurance.
Historically, financial services have been slow to adopt new technologies. However, that is changing rapidly, as FinTech startups and established tech companies alike are introducing new products and services that are disrupting the status quo. It's important to remain up-to-date with the latest changes in FinTech, as it can have a profound impact on your finances.
In general, FinTech can be divided into three categories: payments, investments, and insurance. Let's take a closer look at each one.
One of the most visible areas of FinTech is in the payments space. New technologies are making it easier and faster to send and receive payments, whether they're person-to-person (P2P) payments or business-to-business (B2B) payments.
One popular example of a FinTech payment company is Square, which offers a small card reader that can be attached to a smartphone or tablet. This allows businesses to accept credit and debit card payments, as well as mobile payments like Apple Pay and Google Pay. Many customers, as many as 76%, are willing to make purchases if payment options are easier, showing that businesses need to adopt these new technologies to stay competitive.
Another category of FinTech is investments. This includes companies that offer new ways to invest your money, as well as those that provide services to make the investment process easier. For example, Robinhood is a company that allows users to buy and sell stocks and other securities with no commission fees. Acorns is an app that helps people invest their spare change by automatically rounding up purchases to the nearest dollar and investing the difference.
These types of companies are changing the investment landscape by making it easier and more affordable for people to invest their money. They're also helping to democratize investing, as they're accessible to a wider range of people, not just the wealthy. Accessibility is important, as studies have shown that investing early can have a significant impact on people's financial futures.
The final category of FinTech is insurance. This includes companies that use technology to make the insurance buying process easier and more efficient. It also includes companies that use data and analytics to help insurers better assess risk and price their policies.
One example of a FinTech insurance company is Lemonade, which offers renters and homeowners insurance. Lemonade uses artificial intelligence (AI) to underwrite policies and process claims, making the whole process faster and easier. The company also donates a portion of its premiums to charity, which is something that appeals to many customers.
There are many reasons why you should focus on FinTech. For one, it can help you save money. New technologies in the payments space, for example, can help you avoid costly fees. And in the investments space, new technologies can help you buy and sell securities at a lower cost.
FinTech can also help you make more informed decisions about your finances. The increased accessibility of data and analytics is giving people more information than ever before about their money. This is empowering people to make better decisions about how to save, spend, and invest their money.
Finally, FinTech can help you become more efficient in your financial dealings. The automation of tasks like bill payments and investment portfolio management can free up your time to focus on other things. You can take a financial technology course to learn more about how FinTech is revolutionizing the future.