What is Fintech? Guide to Financial Technology

What is Fintech? Guide to Financial Technology

What is Fintech (Financial Technology)?

1.    Fintech (Financial Technology) is the new financial industry that uses technology to improve financial services by dictionary definition. Fintech, which is the abbreviation of financial technologies in English, refers to technologies developed for the provision of banking and financial services. 

Competing with traditional financial services with their tech nological power, fintech act with the philosophy of facilitating the lives of their customers all over the world. Fintech services have come a long way from the starting point to the present day and have gained a place in the sector, with impressive results. Investments currently received by Fintech initiatives prove this final point. 

2.    Fintech, which received an investment of $22.5 billion in 2017 all over the world, received $57.9 billion in the first half of 2018. These figures show how much Fintech has grown and become widespread day by day.

Here are the examples where we can explain the difference between fintech and traditional financial services in the simplest way:

3.    In the past, to open a bank account, you had to go to a bank branch with many documents. Fintech, on the other hand, allow you to do this through the mobile application regardless of where you are. 

In addition, another convenience that fintech bring to our lives is to turn your smartphone into a “digital wallet”. Thus, you can easily spend the money in your account. In addition to these, examples such as money transfer, check deposit via smartphone can be given. These examples show how much the Fintech service makes our lives easier.

The Convenience That Fintech Brings To Users' Lives

Practicality: Fintech offer their solutions to their users in digital environments. This naturally adds convenience and speed to the lives of its users.

Price advantage: Fintech do not need to spend on physical structures due to their operational structures. Therefore, Fintech have a price advantage compared to classical financial services.

More Service Options: For this reason, fintech, which can provide services to their customers regardless of their location, are more diverse than traditional financial services.

Personalized Experience: Fintech have a number of technological possibilities, thanks to these facilities, they can obtain more detailed and effective information about their customers. Fintech organizations that use this information effectively can provide more personalized services to their customers. In this way, they also increase customer satisfaction.

4.    In Turkey, “Turkey fintech Ecosystem 'according to the report fintech ecosystem is growing rapidly in Turkey. Fintech market in Turkey, already has over 200 companies with approximately $15 billion and is growing at an average annual rate of 14%. Fintech such as Iyzico, Paraşüt, Monitise, Ödeal, My İş Yerim, Birleşik Ödeme draw attention with their rapid growth and investments.

5.    Government agencies have a significant interest in Fintech. Because, Fintech;

It increases the tax income by registering the informal economy. It also expands the market by including a large segment that has not yet joined the financial sector in the system.

This is a sign that the necessary regulations will be implemented in a short time. In the fintech sector, as the competition and service conditions will become clearer, the interest of banks will increase and as a result, many services will appear that more appeal to customer expectations.

6.    Among the most common Fintech services we encounter today;

•    Mobile payment,
•    Artificial intelligence supported portfolio management
•    Credit and money transfer from person to person
•    Call center service with chatbots
•    Insurtech, namely insurance technologies
•    Cryptocurrencies affecting the financial system
•    Contactless payment with the Internet of Things
•    Biometric verification solutions that take personal factors such as fingerprint, eye and voice into account
•    Open banking applications

7.    It is possible to examine the fintech ecosystem under 4 main headings; Demand, Regulation, Capital and Human Resources

•    Demand category expresses especially the demands of end users. Traditional financial institutions consisting mainly of banks, consumers, institutions and the state are in this category.
•    Regulation; laws mean taxes and government policy in initiatives to grow the industry. There are supervisory-regulatory institutions such as the CMB, the Competition Authority and the state in this field.
•    Capital, from those who set up the business, money, goods and labor put into the business. The total investment made for a business or enterprise can be defined as all means of production, money and assets ready to be used.
•    Human Resources refers to the availability of technical knowledge and financial sector experience or entrepreneurial resources. Those who provide this; The world of academia, entrepreneurs, technology companies and traditional financial institutions.

8-    If we are considering using any Fintech solution, the points to be investigated:

•    Are there security certificates?
•    Who are the references?
•    Are there any users in your immediate area?
•    Are there too many complaints about them on forums and complaint sites?
•    Is the customer experience well established in the medium (for example, website) where they provide service?