The term Fintech has become popular in business circles around the world over the past few years. FullOffice Learning has put together this article so you can learn the terminology, why it's so important, and why these business models have such a big impact on the global economy.
FinTech is an emerging industry in which companies use technology to deliver financial services in an efficient, agile, convenient, and reliable way. The word is formed by combining the terms finance and technology.
FINANCE + TECHNOLOGY = FINTECH
FinTech companies offer various types of financial services and operate across a range of markets. Some provide their services directly to users of the financial system, while others design solutions for other businesses.
To get a sense of this trend's impact in Latin America, Brazil has about 498 companies specializing exclusively in financial technology, Mexico has around 249, Colombia has 128, Argentina has 118, and Chile has 82, according to the Latam Fintech Report 2020.
However, fintech's role isn't limited to the financial industry itself — the purpose of financial technology is to improve and offer new opportunities for how small, medium, and large businesses across different industries apply and manage their own finances.
So, what is fintech used for? Broadly speaking, it's used to:
- Streamline payment processes, transactions, and online banking.
- Develop infrastructure for financial services through data science, big data, business intelligence, blockchain, and more.
- Improve cybersecurity and develop systems to secure databases.
- Manage digital assets and cryptocurrencies, and improve alternative monetary policy.
- Automate the management of online financial processes.
- Carry out crowdfunding activities.
Understanding how fintech works starts with seeing it as a customer-focused digital methodology. That's why digital financial products and services are characterized by their simplicity, innovation, and strategic added value in satisfying the end user.