Fintech (financial technology) is the term used to understand the ways in which technology competes with traditional financial methods when delivering a service to customers. It can involve the use of mobile and internet banking, as well as more recent developments such as cryptocurrencies. Here, we will attempt to understand fintech and how it is affecting the financial system.
Investment in financial technology has increased by over 2000% in recent years, so this is clearly a rapidly growing area. Almost everyone uses fintech, perhaps without even realizing it. Perhaps you use a mobile banking app to keep up to date with the payments being taken from your account, or to instantly transfer cash to a friend or family member.
Fintech is not as heavily regulated as traditional financial services, meaning there is an element of risk. Data leaking and hacking is a huge concern, especially as financial technology is growing so rapidly. There are frequent reports of customers having their data compromised, which was much less of a possibility when only traditional financial service methods were used.
However, financial technology has also made our lives much easier in many ways. Those who are unable to borrow money using traditional bank loans have easier access to finance. A great website to use to compare online lenders is http://www.moneral.fi/halvimmat-lainat/edullisin-laina-ilman-liitteita/. Online lenders are a great option for those with poor credit who don’t qualify for a bank loan. However, there is a higher risk of transactions being fraudulent, and interest rates and generally high.
Fintech is not regulated in the same ways as traditional financial services – there is much debate and disagreement over how it should be regulated. The World Economic Forum is taking steps to ensure the fintech industry is as safe as possible, for example by monitoring the use of data, to ensure it is ethical. It is also working to monitor innovation and ensure that start-ups are suitably equipped to handle the risks associated with these new methods of delivering financial services.
Overall, fintech is a rapidly growing industry and one which is positively changing the world of financial services. It is a very complicated area, which can be risky. Data security and breaches can ruin the reputation of a fintech company, so this is an area which needs improvement if financial tech is to continue to grow and develop successfully.