The mass digital transformation has impacted almost all of the world’s industries, which led to the change in our daily lives. Some of it has seeped in gradually. Some came in with a bang. Not long ago, homeowners, company owners, and investors had to walk to the bank to apply for a mortgage, small-business credit line, or brokerage account,... Financial technology, or fintech, is fast changing all of that by making it easier to save, borrow, and invest without ever engaging with a traditional bank. So what exactly is FinTech? Is there a chance that FinTech will replace banks in the future? Let us show you in detail via this blog.
What is Fintech?
The term FinTech is actually a combination of two words including Financial services and Digital technology. In short, FinTech is the practice of using digital technology to create and innovate the development of new products and services including big data, online banking, alternative finance, mobile payments, and overall financial management.
In its early years, FinTech was used as a back-end technology to support banks and financial institutions. Since then, its definition has shifted significantly. It now includes a number of consumer-oriented applications. The year 2019 saw a remarkable development of FinTech in which users can use it to trade stocks, manage funds, and pay for insurance and food.
As a result, FinTech has not only impacted numerous applications but also revolutionized how consumers access their finances. To be specific, it has an impact on everything from mobile payment apps to investment and insurance firms. This profound impact makes FinTech a potential threat to traditional or brick-and-mortar banks, which means it could soon replace banks in the near future. Furthermore, customers in today's digital world are hesitant to use services provided by the traditional financial services industry. Instead, they prefer quick and secure services provided by Fintech. This is why FinTech is becoming more popular and is predicted to replace banks and other financial services.
To see how profound Fintech’s impact is, let's now examine its impact using some statistics. The vast majority of Americans (84 percent), according to a 2016 study, use fintech to manage their finances. Additionally, the majority of them manage their finances using at least one to three apps. About 69 percent and nearly one-third of users, respectively, use these apps daily or on a regular basis.
Surveys have also pointed out that roughly 1.7 billion people don’t have any bank accounts worldwide. Therefore, fintech serves as a lifesaver by offering a simple way to participate and access financial services without the need for a bank account. Due to its development to promote financial inclusion, fintech is the best option.