Digital technology continues evolving at a rapid pace. There aren’t many industries today that don’t use digital tech in some capacity — it transforms business and overall operating processes, improves management and allows companies to provide the best possible service to customers.
Banks and other financial institutions have revised many traditional methods, adopting fintech principles in everyday operations. In addition, many fintech applications help businesses streamline processes and upgrade services, such as crowdfunding. As a result, today’s businesses and startups have everything they need to expand horizons and offer products and services the way customers expect.
What Is Fintech?
Blending the words “financial technology, and” fintech improves how the financial sector helps its customers and businesses. Software programs, Artificial Intelligence (AI) and Machine Learning (ML) algorithms, mobile devices and computers, and the apps they use are all upgraded through the application of fintech management.
Fintech refers to any financial activity, such as wire transfers, crowdsourcing for a startup, investments, and more without the need for human support.
What Technologies Influence Fintech?
As mentioned above, AI and ML are the leading contributors to fintech. Other contributions come from Big Data, analysis, the blockchain, and robotic process automation. Let’s take a look.
AI and ML
Machine Learning and Artificial Intelligence are two technologies that evolve faster than many surrounding technologies can keep up with, which is one of the reasons why AI and ML are such contributors to the world of fintech. AI and ML play significant roles in financial activities such as:
- Computing credit scores
- Integrating payments
- Detecting fraud
- Managing wealth
- Managing inventory
- Maintaining compliance with federal, state, and local regulations
Of all the technology in the world of fintech, it’s safe to say that fintech couldn’t exist without Artificial Intelligence and Machine Learning. In fact, according to Techopedia, before AI and fintech, most industries couldn’t handle today’s expansive nature of quantitative Big Data or the means to analyze it in applications of fintech.
Big Data and Its Analysis
Several industries rely on data, but none as essentially as in fintech. Big Data and its analysis help businesses discover critical trends in applications of fintech, including:
- Customer behavior
- Customer preferences
- Consumer spending
It’s from this data and subsequent analysis that new metrics are discovered, and predictive analytics can be employed.
Blockchain
When you hear the term ‘blockchain,’ you might immediately think of cryptocurrencies. While the blockchain certainly has a role in the crypto universe, it plays much more than just a supporting role. Due to its intangible nature, Crypto couldn’t be tracked or quantified as easily without blockchain technology. This is why blockchain technology is welcomed in fintech. Some of blockchain’s most significant benefits include:
- Secure transaction records
- End-to-end encryption
- Reduced risk of cyberattacks
All of these technologies have something in common — they all incorporate repetitive tasks that, when performed by humans, can:
- Have human-introduced errors
- Slow down other aspects of a business
- Leave less time for reps to offer assistance to customers
The following technology allows for the above technologies to work seamlessly.
Robotic Process Automation (RPA)
RPA assigns the aforementioned repetitive tasks to programs that handle the backend, streamline processes, and support your team. You’ll find RPA in:
- Data collection
- Data statistics
- Compliance management
- Chatbot services
- Email communication
- Transaction management
These four technologies paved the way for all applications of fintech.
4 Applications of Fintech
These applications of fintech disrupted the financial industry when first introduced — now, it’s hard to imagine a world without them.
1. Digital Wallets and Payments
How many people do you know still carry a wallet or purse purely for holding credit cards or cash? Digital wallets and payment methods have largely replaced physical credit and debit cards, with over 25% of payments in 2021 using a mobile wallet.
2. Loans and Credit Scoring
Remember when you had to physically visit your local bank branch to apply for a loan? With paper documents? Then, slowly, the practice moved online, and today, you can apply for a personal or business loan from your smartphone. More enhanced risk models have allowed lenders to offer loans to traditionally underserved segments of the population worldwide.
In the past, consumers could only request a credit report once or twice per year and had to pay handsomely. Today’s consumers can track their credit scores daily using fintech applications. Applications of fintech have lifted a veil on the once opaque procedures in the world of lending and credit.
3. Stocks and Trading
Investing in the stock market used to be something only the most elite of the financial world could take part in. today, you’d be hard-pressed to find someone who hasn’t invested in stock at least once, right from their laptop or a smartphone app. Now, consumers can invest in the stock(s) of their choice, monitor the market, review real-time risks, and share ideas and knowledge in one application.
4. Wealth Management
And speaking of investments, these financial apps let people hold onto assets in one place and manage their entire portfolio whenever they choose, wherever they are, all from a centralized dashboard. If the individual doesn’t quite have the hang of investing? Data analysis can monitor their portfolio according to preset instructions and, through automation, rebalance assets at any time and allow everyday people to build wealth.
It’s intriguing to see how far applications of fintech have come in the past few years and where they may lead tomorrow.
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National Merchants Association is a merchant advocacy group dedicated to reducing the unnecessary fees associated with accepting credit card payments. Since 2004, they have delivered tailored payment processing solutions and best-in-class merchantA business that accepts credit cards for goods or services. service and support for all levels of risk. Whether it’s high-risk or low-risk, brick-and-mortar or eCommerce, National Merchants Association will create the best processing experience for your business. For more information, visit legacy.nationalmerchants.com or call (866) 509-7199.