Fintech
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Fintech is a word used to describe any company that uses technology to provide financial services. Many financial services, for example, make use of the internet, mobile devices, payment apps, or other forms of technology to aid in the ease of use. These services would be defined as using Fintech. To date, there are dozens of Fintech applications available for use, and many companies are making use of this type of software. Fintech can be used for things like managing funds, trading stocks, obtaining loans online (e.g., OpenCashAdvance), and paying bills - and it is changing the way consumers manage their finances.

Examples of Fintech:

  • Crowdfunding Platforms:
    • Crowdfunding platforms are becoming an extremely popular way to raise money, and do so by requesting small amounts of money from large numbers of people. In 2015 alone, over $34 billion was raised through crowdfunding platforms. GoFundMe and Kickstarter are two popular examples of this type of platform.
  • Cryptocurrency and Blockchain
    • These are two prime examples of Fintech at play. Exchanges like Coinbase are used to connect users to buy or sell cryptocurrencies through advanced online technologies.
  • Mobile phone payments
    • If you go into most stores nowadays, you don't even have to have your debit card or cash on hand to make a payment. All you need to do is download a payment app from your cell phone and you can make a payment directly from there.

Of course, these are just a few of the many examples of Fintech out there and are just to give you an idea of what Fintech really is.

But as we move on in our conversation, where are Fintech ideas like these falling short? Fintech seeks to put banks out of business. After all, with all of the new technology, is there any real reason that you need to actually go to a bank? Well, as it turns out, we do still need banks. Rather than completely replacing banking systems, Fintechs are simply pairing up with them. Because money continues to flow through the banking system, Fintechs actually need banks in order to exist. So rather than replacing banks, they are simply grabbing on to some of the margins that they make.

Another major problem for Fintechs is that many banks are now also becoming technology providers. Several different banks, for example, including the Bank of America, Wells Fargo, and Capital One, have recently paired up to create a new person-to-person payment service. Services like these are similar to Fintech services and could be in direct competition.

So while Fintech has sought to disrupt banks, it turns out that they actually need them to exist. Not only that but if banking institutions continue to create new technologies, then the Fintechs could actually be disrupted by the banks themselves. 

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