FinTech now reaches into almost every aspect of the finance industry. This affects each and every one of us in the following ways:
- Stock trading
- Investment management
- Online Purchases
- Use of a robot-adviser
- Transferring money between banks
And almost every transaction that has to do with the exchange of digital money. So what exactly is Fintech?
Fintech stands for financial technology. It is the technology behind the scenes that lets larger financial systems speak to each other. Freedom Debt Relief notes that it can also be its own stand-alone technology. Such is the case with companies like SoFi, Stripe, Robinhood, and Credit Karma.
How Does FinTech Work?
A large part of what FinTech does is to automate the tasks that are performed by humans. This cuts down on labor cost for financial institutions. Want to see this in action? How many tellers did you count at the last bank you walked into? You probably had no problem using your fingers on one hand, with a lot of fingers left over.
Freedom Debt Relief asks you to compare banks now to those from 10 or 15 years ago. How many tellers were in the bank then? Probably close to all of the teller windows were filled with tellers. Also, think about the last time you actually had to visit a bank. So many of those tasks that we use to think of as common have now been automated away by FinTechs.
How did FinTech replace bank tellers? Mainly through additional improvements in bank websites. More and more financial services are moving online. The proliferation of online signing certainly played a large part in how the bank website has now become our bank teller.
Behind the scenes of a financial institution’s website are various technologies that perform a specific task. These may have been built by the bank but often they are created by 3rd parties who specialize in the specific task.
For example, one company may handle only transfers from one bank to another. Another company may focus strictly on credit card transactions and another handles all the details of making a mortgage available online through the bank.
What Impact Will FinTech Have In The Near Future?
Artificial intelligence (AI) will be a big part of FinTech in the near future. While current FinTech solutions help automate many tasks and connect financial systems, not as many are using AI.
Freedom Debt Relief believes that AI fits in by allowing software to evolve on its own. This means learning our spending habits, trading and investing styles, and then providing suggestions that have a high probability of success. Meaning ultimately, saving us money.
Imagine having your own financial advisor always readily available to make suggestions on where to spend or save your money based on your historical financial behaviors. Because these AI FinTechs will know so much about our financial behavior, they will provide a less intrusive form of suggestion.
Has your debt got out of control? Freedom Debt Relief could help. Contact them at freedomdebtrelief.com to speak with a certified debt counselor for free.