Fintech is any technology that delivers financial services through software.
Statistics show that financial technology is booming. It is enough to look at your own habits and interactions to notice that you are most probably using fintech more than you actually realise.
Fintech is a broad term and includes any technology that is used in the finance sector. Anything from PayPal, Apple Pay over online banking to cryptocurrency transactions counts as fintech.
Fintech is a Fast Growing Industry
The fintech industry was worth close to $6 trillion before the pandemic, with double-digit growth predictions.
This is only considering the companies that actually offer the financial services, if you add the other industries like financial software development services, hardware developers, and online security services, we see enormous potential.
Another growth factor is the expanding industry adoption of financial technology. At the moment traditional banks are perceived as more trustworthy, but the tide is turning, mostly thanks to younger generations that are less reserved to new technologies.
Surveys show that a majority of Americans are not familiar with a lot of fintech products like open banking. Nevertheless, a large number of consumers would embrace new technologies aimed at better accessibility and faster, more personalized services.
The Hype Factor
The news is full of success stories of normal Joes getting rich through stocks or cryptocurrency. The prospect of getting rich fast is benefitting a lot of fintech companies, Robinhood, and cryptocurrency trading platforms immediately come to mind.
What happened with the Gamestop stock wouldn’t have been possible without Robinhood and modern technology that gives broader access to the stock market for small investors. Bitcoin enjoys the same amount of popularity but is a whole new ball game that opened up the world to blockchain technology.
More and more technology companies are using blockchain technology to develop faster, safer, and more economical trading and transaction systems. And thanks to these developments the next trend, mobile payment systems, are becoming more sophisticated and sustainable. Paying with your phone or smartwatch is not a gimmick anymore, it is practically standard, thanks to fintech.
What Could Possibly Go Wrong
The dot-com bubble is still in many people’s memory, new technologies hit the market, lots of money was invested into internet-based companies, but not all of them became Google or Facebook. The bubble burst and the market crashed.
Just like the internet companies of the late ’90s, today’s fintech companies need to be profitable to be successful. Just like then they need investors who understand the technology and the market that it can serve.
Unfortunately, there have been a lot of companies that just put blockchain in their name and received money through small investors, or selling of public tokens, for a product that maybe even the founders did not understand. On the downside, this reduced the chances for really innovative companies to get further financing necessary to get their product on the market.
Despite the ups and downs, the fintech industry is up and coming. Venture capital-backed fintech companies have a combined value of over 400 billion dollars, 2021 saw over 50 billion dollars new investment.
If you are a decision-maker, investor, or entrepreneur, the numbers do not lie, there is a future in fintech.