Financial technology, or fintech, is the application of new technologies to improve and automate financial services. This broad category encompasses a wide range of products and services such as online banking, mobile payment apps, crowdfunding platforms, digital currencies like Bitcoin, and many others. It also includes many of the underlying systems that support them, such as computer chips and software. Fintech is an incredibly fast-moving field that is constantly evolving and improving.
While the term “fintech” is relatively recent, finance and technology have a long history together. In fact, the first electronic fund transfer system was developed in 1866 using telegraph and Morse code. While it was primitive by today’s standards, this system allowed people to send funds between accounts at different banks over a significant distance. This was the first significant step towards what would later be referred to as fintech.
Since the global financial crisis, there has been a surge of interest in and innovation in fintech. This has been fueled by changing consumer and business needs, as well as rapid technological developments. Many established financial institutions have reacted by partnering with start-ups to develop new products and services.
Currently, there are over a thousand fintechs operating around the world. They are transforming the way we save, borrow, invest, move, and pay money. They use data and analytics, artificial intelligence, and other digital tools to offer more efficient, user-friendly financial services. There is no typical fintech company: they can be start-ups, growth companies, or even traditional financial institutions. Some of the more prominent examples include peer-to-peer (P2P) lending platforms like Prosper or LendingClub; crypto apps, including wallets and exchanges; and stock- or cryptocurrency-trading apps such as Robinhood or Coinbase.
These innovations are creating a more seamless, integrated experience across all aspects of our personal and business finances. For example, many consumers now deposit and withdraw money from their bank account at a store or ATM without ever needing to visit the branch. Additionally, people can track their spending habits with a smartphone app or get investment advice from a robo-advisor like Betterment.
As the fintech industry continues to evolve, it is important for policymakers and regulators to keep up with the changes. This will help them to understand the risks and opportunities that come with these innovations, as well as how best to encourage them. To this end, the IMF and the World Bank have recently launched a paper that takes stock of country experiences with fintech and identifies key topics that require further exploration by international bodies. The paper, Fintech: The Experience So Far, draws on discussions with country authorities; the findings of the Global Fintech Survey, which was conducted by the IMF and the World Bank in 2019; and deeper exploration of selected fintech-related issues by IMF and World Bank staff.https://greyjournal.net/hustle/work-tech/navigating-the-new-challenges-for-fintech-startups-in-a-changing-economic-landscape/
