The word fintech has been around for some time, but many don’t realize it. Essentially, it is the merging of the words finance and technology. Fintech is technology that has reshaped how we make purchases and access our money. The first piece of fintech was the credit card, with the first one being the Diners Club Card in the 1950s. The first established credit card was the BankAmericard in 1958. In the decades since then, automated services have not only made credit cards more convenient to use (along with perks), but also in how we manage and access our money via banks and financial institutions. Today, we have online banking without traditional bank fees and robo-advisors to help us make investments. There are numerous payment platforms for making payments and purchases as well. Fintech has also breached the business world.
Fintech comes in many forms to help businesses operate efficiently and increase revenue. Some of the more common forms are lending, payments, capital, and insurance. People no longer need to go to a traditional bank to get a loan. Fintech businesses offer alternative lending (peer to peer) through a lending platform. They can determine the value of a business and automate the underwriting process, saving time and money for both parties. Fintech has made it much easier for businesses to set up their payroll in real time. There are numerous payroll software platforms (e.g. Gusto) that provide safer transactions and fewer errors. Insurance is another area fintech has made big improvements to underwriting and products through apps. Insurance companies can quickly collect risk data to make better risk assessments and be more flexible with their products. For example, a person can purchase home or auto insurance for a limited time period. Fintech has also made raising capital much easier. Entrepreneurs have more alternative lending options (e.g. SocietyOne) and can even use crowdsourcing. They also have access to new currencies such as cryptocurrency (i.e. Bitcoin). Entrepreneurs can raise the capital needed by investing in cryptocurrency or through cryptocurrency crowdsourcing (initial coin offering).
As more fintech companies pop up, businesses will benefit from their automated services and software. In turn, businesses will be able to provide better customer service and products to their customers. Fintech will continue to flourish and disrupt the business world.