What is Fintech, its future, and how does it work

 Modern society and even traditional society must get used to the unexpected and always be ready for rapid changes. The advancement of science and technology, innovative electronic payment methods, and financial institutions are moving very quickly, sometimes replacing entire lifestyles even before the change of generations.

Sometimes a tech boom appears where you least expect it. While the world was actively watching the emergence of Silicon Valley, Facebook, Google, and Amazon, there were stories developing about ideas and startups in IT and the development of the Internet of Things and Digital Finance. Imperceptibly, but confidently, industries and e-money services have advanced forward, which although technological, is simple and understandable to people who are not tech-geek. These include medicine, transportation, communications, and finance.

Fintech is not something new to the world as it is being promoted now in many websites and media outlets. Financial technology is a decades-old concept. For example, ATMs were at one time at the forefront of fintech products and innovations as they provide financial services with the help of technology, as were signature verification techniques that were first used by banks in the 1860s. Financial technology, or Fintech, is not a new term, but only in recent years has this activity begun to leave the world of banking and gain separate industry features. According to the latest reports submitted, from 2010 to 2019, investment in the financial technology industry exceeded more than $ 135.7 billion, according to statistics from the Statista website and platform, and among these statistics there are Arab countries that contribute significantly to these numbers, including:

So what is Fintech? In its broadest definition, this is exactly what it is: the technology used and applied in the financial services sector, and used primarily by the financial institutions themselves. But with many sophisticated additions, Fintech introduces technologies that revolutionize traditional financial services, including mobile payments, remittances, loans, crowdfunding, and asset management.

Financial technology is a technology that describes the emerging financial services sector in the 21st century. Originally, the term applies to technology applied to consumer and commercial financial institutions.

Firms operating in this industry can be roughly divided into two groups:

• Startups that provide technology solutions to existing financial companies.
• Startups that work directly with consumers and clients of financial services.

According to Statista statistics, more than 10,000 fintech companies have been registered, operating in various fields. Of course, most of them are far from fully implemented on the market. However, many of them already possess strong capital portfolios and clients.

Since the end of the first decade of the twenty-first century, the field of fintech has expanded and includes not only technological innovations in the financial sector, but also innovations in financial literacy, financial education, retail banking, investment, and even cryptocurrencies and Bitcoin. The concept of FinTech should have become popular with the general public, when blockchain technology and cryptocurrencies emerge. And until now FinTech is known to anyone interested in cryptocurrency.

What is Fintech, its future, and how does it work

The term Financial Technology, abbreviated in FinTech, can apply to any innovation in how people interact with businesses in payments, money transfers, e-wallets ... from electronic inventions to deal with money to digital account records and money algorithms. Since the Internet revolution and the mobile Internet revolution, financial technology has grown explosively, and FinTech, which originally referred to computer technology and algorithms applied to the back office of banks or commercial companies, now describes a wide range of personal and financial technology interventions.

The financial technology industry

Financial technology aims to improve financial and banking services. Cutting-edge innovations such as artificial intelligence and Blockchain present new ways of doing business.

There are many areas affected by fintech, in particular:

• Banking services
• Insurance
• Loans
• Personal financing
• Electronic payments
• Investment loans
• The investment capital
• Wealth management

In the coming years, no escape from that, all of them will undergo digital facelift. Corporations need to join the ship and the technology ride or go old-fashioned and lose all of their customers. Leading brands in the fintech sector include:

• Apple Inc.
• Goldman Sachs
• PwC
• JP Morgan
• Samsung
• Amazon
• PayPal
• And many other companies.

Is fintech safe?

One of the interesting ways fintech companies have transformed the financial services industry has to do with consumer confidence. As many reports indicated that 68% of fully respondents indicated their willingness to use financial tools developed by non-traditional institutions, i.e. non-financial. And 89% of the SMEs that adopt it say they are willing to share data with fintech companies.

Basically, the platforms no longer need to hold the advantage of Wall Street for consumers and businesses to hand over financial data, or even manually acquired money.

But it remains to be seen whether this confidence is well founded, or if the benefits outweigh the potential risks. Interacting with fintech companies, many of which remain largely disorganized, particularly in the world of cryptocurrencies and Blockchain, can lead to exposure to unwanted or unexpected threats.

To date, there is no consensus about how secure fintech solutions are across the board. Such assurances are likely to be difficult to obtain, given the scope and scale of fintech's reach. But consumers are smart to exercise caution and become very eager to raise questions about the security of their personal data.

Expansion prospects for FinTech

Technological innovations have already brought about the trade and banking methods of the twentieth century. The only mobile app for stock trading Robinhood does not charge any transaction fees, and peer-to-peer lending sites Prosper and Lending Club that have promised to curb rates during the open competition for loans to broad market forces.

Technologies being designed that should come to fruition by the coming years include mobile banking and mobile trading as is the case with the Binance app that offers almost all financial solutions, commodity markets and digital wallets (such as Apple and Google that work on Developing electronic wallet systems that you see copies of in current smartphones, financial consulting  and automated consulting sites like LearnVest and  Betterment , and all-in-one money management tools like Mint  and  Level . And this really looked like with blockchain technology and Ethereum blockchain in particular, which helped In the emergence of many startups that are working on this now, and whose shares we see in the form of tokens that can be traded after the end of the ICO crowdfunding campaigns or Initial Coin Offering.

The new technology in FinTech

In the old days, individuals, institutions, and businesses used the invisible hand of the market, represented by the price signaling function, to make financial decisions. New technologies, such as machine learning, predictive behavioral analytics and data-driven marketing, will take the guesswork out of business and eliminate hoaxes for financial decision-making. For financial decisions for users and merchants. On the back side, improved data analytics will help institutional clients further refine their investment decisions and open up new opportunities for financial innovation.

Users of Financial Technology or Financial Technology:

Who uses FinTech? There are four broad categories:

• B2B banks and their professional clients. 
• B2C for small businesses and consumers.

The trends towards mobile banking and the increase in information, data and analyzes to be more accurate and decentralized in order to create opportunities for all four groups to interact in unprecedented ways.

What does fintech hold for the future?

Nobody knows for sure what Finctech innovations are looming on, and this uncertainty is exacerbated by the chaos caused by the Coronavirus. Projections in early 2020 prove that the mature sector will continue to see expansion in 2020 only partially accurate. Deloitte notes that interest rate cuts and the economic crisis it is causing and caused by the Coronavirus throughout 2020 have overturned industry assumptions about the near future of fintech.

Fintech companies, such as their clients and investors, have suffered financial setbacks, with some forced to reduce staff size or vacation employees, while others struggle to secure investor financing amid hasty transformations into virtual meetings with venture capitalists. But at the same time, the demand for fintech may not have been higher than ever: Businesses and banking customers are increasingly relying on technology to help them navigate their financial livelihoods.

Deloitte predicts that the economic recovery will go hand in hand with new opportunities for fintech companies. This may be especially true in a business environment that has instantly become more conducive to digital financial services and e-commerce out of absolute necessity.

Larger, long-term trends for the future of fintech remain relatively intact. Consolidation, partnerships, and ongoing collaboration between the legacy banks and fintech companies seem imminent. Consumers can likely expect to see the continued emergence of companies promoting bright services worthy of headlines, including the likes of Blockchain, virtual cryptocurrencies, artificial intelligence and peer-to-peer transactions.

Fintech is officially a major player in the global economy, business landscape, and the fabric of modern society in general. The field is widespread and rapidly growing and seems to be here.

Financial technology or Financial technology or FinTech, you can now find it in applications on your phone, such as your bank application, financial applications over the Internet, or an application to send and receive money from a well-known company that provided you with the service in order to facilitate the transfer process.

Are you ready to invest in financial technology?