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What is Fintech?

Fintech Basics
What is Fintech?

Finance and Technology, aka Fintech, is one of the trending fields in recent years.

We all know Financial systems have existed for a long time. They date back to BC's if you consider accounting and bookkeeping practices followed by a few older civilizations. Banking found its roots in the United States during the 1700s, not getting too much into history. But you get the picture Finance is a relatively older concept and has been flourishing through ages.
"Technology" primarily referring to chips, microprocessor, software- building blocks of modern-day computation. Essentially ability to do faster Math by "machines" started its ascent in the latter part of the last century. That makes it sound ancient, not precisely it maybe around 40-50 years ago.
With the advancement in technology, the size of "computers" continues to shrink. We carry devices in our hand that can do millions of computation in a few milliseconds.

The common denominator between finance and technology are the numbers. Modern technology trends such as Machine Learning, Big Data, Cloud Computing, and Ubiquitous computing(IoT, phones, tablets, etc.) has helped bring about efficacy in the financial industry.

Let's take a few everyday fintech examples in the consumer markets.
(a) Banking improvements for consumers:  A few years back to deposit a check into checking or savings account one had to drive to their bank physically. Now many modern banks offer a facility to take snapshot from their smartphone and deposit checks from the comfort of their homes.
(b) Mobile Money Transfer: Going out with friends and splitting a bill after a meal has never been easier. Mobile payments make money transfer among friends and family a breeze.
(c) Digital Wallets: Got a cup of your favorite coffee from a trendy coffee shop and forgot to get cash or your credit card. Not a  problem, as long as you have your smartphone you are covered.

I can go on with many modern-day applications. However, I plan to cover all these use cases in depth over a while. But now let us move on to fintech usage in the large financial institution.
(a) Algorithm trading: with access to computing and data on demand,  financial institution use complex algorithms to predict market moves and make trades.
(b) Blockchain: Technologies such as blockchain enable companies to track their assets very closely.
(c) Machine Learning and Artificial Intelligence: This has been an overly used terminology in the last few years. In a nutshell, you can have machines learn on their own and react to situations not requiring human intervention. This technology is useful in the various financial decision-making process to reduce risks and to optimize a companies portfolio.

As we can see, the fintech touches all part of our finance and commerce, B2B, B2C, C2C i.e., where every money flows there is fintech. Moving forward, I expect this trend to continue. With a lot of new Venture Fund flowing in this space, there is rapid innovation in the horizon and will force incumbent players to adapt to more modern trends.