Fintech – a contraction of “finance” and “technology” – refers to financial service firms whose product or service is built on technology, often resulting in highly innovative, pioneering services
The fintech space has become increasingly prominent in recent years, and has grown exponentially. For example, global investment in fintech start-ups quadrupled between 2013 to the end of 2014, from just over $3 billion in 2013 to over $12 billion in 2014.
The range of financial services offered by the fintech space is extensive, including, but not limited to, money lending, payments, currency exchange, portfolio management and wealth management.
Transparency is one of the principal objectives of genuine fintech companies, which based their services on disrupting the stranglehold of the traditional financial providers’ on the financial services sector.
There are many financial services offered now by fintech companies to provide competition to the traditional finance sector dominated by banks. Their rapid growth is largely attributed to the advances in technology that have made such innovation possible, as well as other factors.
The Global Financial Crisis of 2007-09 is also a notable reason for the rise of fintech. For instance, bank credit for the private sector and for individuals across the globe was severely curtailed after the crisis, which created a need for alternative lending, one of fintech’s largest services.
1. Money transfer
2. Equity funding
3. P2P lending
4. Mobile payments
5. Currency management solutions
There are now fintech associations in several major countries around the world, further boosting investment in the sector, and the popularity of its services.