A Beginner's Guide to Financial Technology

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The FinTech space has raised more than a whopping $13 billion, and that’s just in the first quarter of the year! From digital loans to e-commerce payments, digital currencies, and the like, FinTech has really grown! Not to mention all the hullabaloo around the infamous cryptocurrency Bitcoin, which has made cryptocurrency, blockchain, and Web3 more popular than ever.

As you can imagine, FinTech has continued gaining momentum in the last decade, making it imperative for everyone to familiarize themselves with the concept. This must make you wonder what FinTech is and why it’s in demand. You can take FinTech courses to find out, but for now, let’s share the beginner’s guide.

What is FinTech?

FinTech combines finance and technology, with the name given to the employment of technology, helping businesses and customers manage financial processes with algorithms and software on any device. FinTech would include modern tools and innovative methods to improve and automate monetary services.

It sounds intimidating, but this term basically refers to modernizing banking and transactions. It all began with digital money, then evolved into phone banking and online trading, among other easier transaction models. Today, there has been explosive growth in the industry, encompassing data analytics, cybersecurity, cloud computing, and artificial intelligence.

In fact, you’re already using FinTech already, you just didn’t realize it! Mobile payment apps like PayPal, Venmo, and Facebook Pay are all part of FinTech. The same goes for using your mobile banking app. FinTech has completely integrated into the financial service industry.

The Importance of FinTech

The COVID-19 pandemic has become the catalyst for the rapid espousal of tech to minimize human interactions while amplifying customer experience and helping businesses adapt to this unfamiliar phenomenon.

In fact, McKinsey Digital has reported that the world moved five years forward in consumer and business digital adoption within two months. Today, online activities and transactions aren’t just convenient. They are necessary.

It seems like digital services are here to stay, with customer behaviors and preferred interactions significantly changing. It’s estimated that the global FinTech market will be worth US$26.5 trillion in 2022.

Is FinTech Safe?

As of now, there are almost 48 FinTech unicorns, which are companies with a value of over US$187 billion. The disruptions from the global pandemic have helped reveal financial vulnerabilities worldwide, with companies now more focused on consumer safety and wellness.

Because safety is the top priority, FinTech companies are now diversifying what they offer, exploring more opportunities to innovate and collaborate. Moreover, we find these companies planning to expand into lucrative new markets.

Here are some of the FinTech trends to look into this 2022:

Traditional banks and institutions adopt digital transformation by using fully-digital services and advanced algorithms to assess risks
Banks and FinTech will start going green, with the ClimateTech software growing
SuperApps will enter, dominating new markets where customers can avail of various services in one mobile app