Published May 16, 2023, 7:20 a.m. by Arrik Motley
1. The fintech industry is growing at an unprecedented rate.
2. fintech startups are attracting big investments from established financial institutions.
3. fintech is helping to drive the adoption of new technologies in the financial sector.
4. fintech is changing the way people interact with their finances.
5. fintech is making it easier for people to access financial services.
7. fintech is providing new opportunities for financial inclusion.
8. fintech is helping to reduce the cost of financial services.
9. fintech is increasing competition in the financial sector.
10. fintech is enabling the development of new business models in finance.
11. fintech is playing a role in the transformation of the banking sector.
13. fintech is contributing to the growth of the sharing economy.
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it's fast become one of the big
buzzwords in business and technology
it's one of the hottest properties to
invest in and you can be sure it's only
going to get bigger and bigger
but stick with us until the end and
you'll see how a lot of people have no
idea what the word fintech even means
welcome to alux.com the place where
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you don't need a degree in computer
science or finance to figure out it's an
abbreviation for
financial technology but when it comes
to fintech
whether you're in the dark or well clued
up we thought we'd shed a bit more light
on this hot topic
number one traditional banks are worried
about it
and with good reason too that's because
until a few years ago banks had a tight
hold on pretty much
anything we did involving money and
being the huge
bloated dinosaurs that banks are there
wasn't exactly much
incentive for them to innovate or be
competitive fast forward a few years and
a few leaps ahead in digital technology
and it was time for smaller more agile
players to make an entrance
you got it fintech and in the last
decade they've been giving banks a real
run for their money
as innovation expert and fintech vc
arvind
sankharan put it we're witnessing the
creative destruction of financial
services
rearranging itself around the consumer
who does this in the most relevant
exciting way using data and digital wins
so the more you see the word fintech
cropping up in your news feeds
you can be sure the more headaches
old-fashioned bank managers are getting
number two the term includes sectors you
probably didn't think were fintech
put simply fintech companies unbundle
all the different types of financial
transactions that banks traditionally do
and as each fintech tends to specialize
in just one area
they focus on doing it in a way that's
efficient and streamlined and as user
friendly as possible
on a digital interface and at a low cost
to the consumer
that includes platforms that are already
fairly obviously fintech
like platforms that let you make
payments online or in stores
square or paypal platforms that let you
trade stocks
like etoro or robinhood and anything
digital you use to apply for a loan
the fintech label also includes
cryptocurrencies and the crypto trading
platform coinbase
and the so-called neo banks like chime
transferwise or revolut but there are
other players you may already be
familiar with but hadn't thought of as
fintech
crowdfunding is also considered fintech
so it includes the likes of kickstarter
and gofundme
and if you make or receive payments via
patreon you're also using fintech
or if you've raised money or donated
money via online charity fundraising
platforms
that's fintech too and there's fintech
specifically for medicare
one example is oscar an american health
insurance company that uses
i.t to shake up the health care system
making it easier and more transparent to
make medical
claims all at a reasonable cost
number three it's lifted millions of
people out of extreme poverty
one thing that fintech does a great job
of is bringing financial services
to people who couldn't access them
before often that means people who
didn't have a regular income
or a permanent address and fintechs
allowing them to build wealth and escape
the poverty trap
a case in point is m-pesa it was
released in kenya in 2007
and basically transforms your smartphone
into a bank account
it allows users to make and receive
payments make online deposits all in a
secure way
and it gets credit for having reduced
crime in a society that used to be
mostly cash
and prone to theft in fact since m-pesa
was launched in 2007
it's raised 2 percent of kenyans around
200
000 households out of poverty as well as
many other people in different countries
throughout africa where it's also used
and we think that all of this
means fintech deserves some serious
kudos
number four it's revolutionizing the
loans market
looking and applying for a loan is a
great example of how traditional banks
were drowning in bureaucracy
and how fintech has shown us all it can
be improved and streamlined for a lower
cost
now it's possible to find a whole range
of apps and websites that help you
compare prices of credit card loans
in a way that banks didn't used to do
that includes
peer-to-peer lending platforms like
prosper marketplace and a lending club
sites for business loans like cabbage
and lendio
and fintechs that lets you apply for
mortgages which take traditional brokers
out of the equation and approve loans
faster
and in 2016 american fintech sofi
which helps with student loan
refinancing became the first online
lender to get a
aaa credit rating number five
they could make traditional credit
ratings obsolete
anybody who's ever taken out a loan
knows how your credit rating is the holy
grail when it comes to being able to
access money
a bad credit score shuts off all kinds
of opportunities and it's difficult to
shake off
this is something else that fintech has
been busy disrupting
that's thanks to fintech lenders like
affirm which offers loans to people with
bad or no credit ratings and also helps
them build up their credit rating
or upstart which uses totally different
data than usual
like employment history to determine how
creditworthy you are
and all this means that soon enough we
could be seeing the end of credit
ratings as we know them
number six cyber security is still a big
concern
of course it comes with the nature of
fintech companies that they would hold
huge amounts of sensitive data
and there are high risks if all of that
gets stolen and along with all of the
good news around fintech
it's worth noting it's not all rosy we
do need to be careful
figures from last year show that 27
percent of fintech companies have
experienced a security incident
and 29 aren't sure because they haven't
checked
with more investment and more
transactions being made through fintech
this is likely to improve in the future
but it still goes to show just how
seriously we should be taking cyber
security
and while we're on the topic we're going
to take the opportunity to strongly
recommend
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to online security and
make the smart choice number seven
investment in fintech is going up
exponentially
with so many movers and shakers of the
last decade being fintech
this one shouldn't come as that much of
a surprise over 300 billion dollars has
been invested in fintech in the past
decade and according to goldman sachs
the market worth of all fintech firms is
4.7 trillion dollars
that includes investments made by big
tech firms into their own platforms
like apple pay and google wallet as well
as the financing that's been secured by
a large number of startups which is
about 12
000 fintech startups across the world
number eight the word fintech originally
described the backend technologies of
traditional banks
the first time most of us heard the word
fintech was probably sometime in the
last decade but the first recorded use
of it goes back a lot further to 1971.
it was originally used to describe the
back-end technology
used by banks and big financial
institutions kind of ironic seeing as
now we use it to talk about their
competition
and the first fintech that really went
global is a company we all know well
paypal which launched in 1998 by one of
our favorite people here at alux elon
musk
although it wasn't until quite a bit
later the term fintech was used more
widely
number nine it's a huge user of machine
learning
as fintech offers cutting-edge products
it stands to reason they use the most
cutting-edge new technologies
and are some of the biggest users of
them and none more so than machine
learning and ai
one of fintech's most famous uses of ai
is in so-called robo-advisors
now sure they might sound like
armor-clad law enforcement agents from a
dystopian future
but the word actually refers to
algorithms that automate investment
advice
and basically they do the same job as
financial advisors but at a lower cost
and another way fintech companies use ai
is in their cyber security to fight
online fraud
they do this with computer programs that
use information about your payment
history to flag up transactions that are
outside of the norm
number 10 and other new technologies too
yep fintech uses all kinds of new
technologies
like chat bots which assist customers
with basic tasks and cut down staffing
costs
or an area called predictive behavior
analytics used in car insurance apps
like route insurance
basically the app tracks a driver's
movements and assesses their driving
skills
and adjusts the premium rates based on
their performance behind the wheel
and of course blockchain which was
developed specifically to record
transactions of bitcoin and is closely
connected with one of the most talked
about areas of fintech
crypto number 11.
they can improve your spending decisions
in case you're one of those people who
finds it difficult to make the right
decisions when it comes to money
we've got good news for you it could be
fintech that saves the day
that's because one area of fintech
that's been getting lots of users are
personal finance apps
with apps like mint money dashboard and
credit karma you can use budgeting
functions to help you spend less and hit
your savings goals
and some apps use gamification to add
some fun into saving which is not
usually known as the most
fun activity to do as practical as it
may be and a lot of research
shows that they actually work and help
people save more money and feel more
satisfied about their spending decisions
number 12 the world's biggest fintech is
a subsidiary of alibaba
for those of you who don't spend a lot
of time in china it might not be that
familiar a name to you
but at the moment the world's biggest
fintech company is chinese ant group
valued at over 60 billion dollars and
with 10 000 employees
it also owns several major financial
services like alipay
the largest online payment platform
ua-bow
the world's third largest market fund
and a credit rating system
sesame credit and if you've been paying
attention when you heard that one of
these services
is called alipay it probably didn't take
you long to figure out that it's part of
the alibaba group
which means along with apple pay google
wallet and jack dorsey's
square they're one of several fintech
companies that have a regular tech
company backing them up
number 13. asia is the biggest consumer
of fintechs
that's not just in terms of the number
of people using them but also the
percentage of the population
according to an ernst young survey china
and india have the biggest fintech usage
both with 87 percent of people regularly
using fintech
while south africa was in the third spot
with an adoption rate of 82 percent
number 14 but the usa is the biggest
producer it won't come as much of a
surprise that silicon valley has the
highest concentration of fintech space
there
but there may be a few surprises on the
list of the world's top 10 fintechs
especially if you weren't expecting to
see any baltic countries make the top
ten
but two of them do lithuania in fourth
place
and estonia at number 10. after north
america
asia is the second biggest home of
fintechs with singapore taking third
place
globally number 15.
fintech is known for its relaxed work
ethic
traditional banks have always been seen
as stuffy and old-fashioned places to
work
not exactly the kind of workplace you
can roll up to in jeans and a t-shirt
but in their relentless quest to
modernize the world of finance
fintech has gone in the opposite
direction fintech workplaces are known
for their casual dress code
as well as perks like staff happy hours
and in-office yoga classes
and that's something that's posing a
threat to traditional banks as
fintechs are finding more and more ways
to bag top talent in finance
so alexers what other changes in the way
we use money do you think fintech will
bring to us in the future
let us know in the comments now for
sticking with us until the end
here's your bonus it may be
revolutionizing money
but most people still don't know what
fintech is
fintech is all around us more and more
of us are using it
more and more money is changing hands
through it and fintech companies are
getting more investment
but according to an ernst young survey
made in the usa 63 percent of people
have never even heard the term fintech
before
as well as those that couldn't recall
having ever heard the word fintech
another 21 said they'd heard the word
but had no idea what it meant
and only 16 could even attempt to give a
definition
hey luxers we know how you like to stay
well informed when it comes to the
important things happening in our world
so we're sure a lot of you were in that
16
and we're well clued up on ventec and we
hope you now know even more about it
after watching the video
and if you weren't in that 16 don't
worry we're confident you know what it
means now
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