Investopedia describes financial technology which is simply termed as fintech, to be a new technology that is concerned with the improvement and the automation of the delivery of financial services. Financial technology involves various sectors and industries which includes the educational sector, the retail and banking sector, the fundraising and non-profit sector and lots more. The financial sector system also includes the idea of developing and using cryptocurrencies.
There are various activities carried out on a daily basis and we fail to recognize them as part of a financial technology activity: the transfer of money, the depositing of checks into smartphones, applying for loan through a third party application, raising money for a business start-up,are all activities of financial technology. The idea of financial technology, is to develop new and modern technologies that will disrupt traditional financial markets.
Sectors of Financial Technology.
The blockchain is one way for the financial technology to effectively perform, the integration of both services provide a new and basic type of financial service.
Financial technology is involved with the integration of machine learning to help in trading prediction, it provides basic understanding as to where trading service is headed.
Regulatory technology is the technology that helps firm that are working in the financial service industry to meet the compliance of financial rules.
Insurtech happens to be a smaller portion of fintech, it relates to the method of using technology to simply improve the efficiency of insurance industry.
Initial coin offering (ICO) is a subset of fintech, which is a method of crowdfunding for start-ups on the blockchain. While IPO is similar to ICO, there is a slight difference. IPO is the process where a certain share of the company is sold to investors.
Open banking is another rising idea in financial sector, banks are allowing third party companies to create applications and services making use of the bank’s data to run effortlessly.
Robotic advisors is a platform affiliated with financial technology, it reduces the need for an investment manager as it automates investment idea by making use of financial algorithms.
The unbanked and underbanked system is a sector that operates in underdeveloped areas, the system provides financial alternatives to middle class and low income earners.
Smart contracts is a blockchain based system that is used to seal an agreement between a buyer and a seller. Smart contracts usually save time and cost as they require humans to get them executed. Financial technology is a way to bring civilization and improvement as well as aid ease in the traditional mode of marketing.