What is Fintech? That’s the question on so many people’s minds these days. With the development of technology and technology entering our lives; money transfers and other transactions are made much easier thanks to the help of mobile applications. This is a perfect example of Fintech.
● Fintech refers to the incorporation of technology into financial services products in order to improve their usability and delivery to customers.
● Fintech operates largely by unbundling existing businesses’ offerings and establishing new markets for them. Startups in the banking business disrupt incumbents by increasing financial inclusion and reducing operating costs through technology.
● Fintech financing is on the increase, but there is a slew of regulatory issues to contend with.
Guide to Fintech – Financial Technology
What is Fintech? Fintech or Financial Technology is the new platform that aims to compete with traditional financial methods within financial services. Since the term Fintech is quite new to anyone, there are some certain points to understand. In this article, you will find answers to your questions regarding Fintech or Financial Technology.
What is Fintech – Financial Technology?
The term “Fintech,” also known as Financial Technology, refers to innovation that aims to enhance and simplify the delivery and usage of financial services. Fintech, at its most basic level, is used to assist corporations, company owners, and individuals in better manage their financial transactions, procedures, and lifestyles via the use of algorithms and specialized software that run on computers and, increasingly, smartphones. The term “fintech” is a mix of “financial technology” and “financial innovation.”
Fintech emerged in the twenty-first century to describe the technology used in the back-end systems of established financial organizations. However, since then, there has been a move toward more consumer-focused services and, as a result, a more consumer-focused definition. Fintech today encompasses a wide range of sectors and businesses, including; education, retail banking, nonprofit fundraising, and investment management, to mention a few.
Fintech also leads to the introduction and use of cryptocurrencies like Bitcoin. While that sector of fintech gets the most attention, the main money is still in the traditional global banking business, which has a multi-trillion-dollar market valuation.
In recent years, technology companies have received a flood of financing. As we mentioned in the State of Venture Capital report, 2018 was a banner year for venture capital, with a total of $254 billion invested globally in 18,000 businesses through venture capital funds, up 46% from 2017.
Here are the examples where we can explain the difference between fintech and traditional financial services in the simplest way:
● In the past, to open a bank account, you had to go to a bank branch with many documents. Fintech, on the other hand, allows you to do this through a mobile application or a simple pc with an internet connection regardless of where you are.
● In addition, another convenience that Fintech brings 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 transfers, check deposits via smartphone can be given. These examples show how much the Fintech service makes our lives easier.
You can find more detailed information on Wikipedia.
Understanding Fintech – Financial Technology
So what is Fintech? From the advent of digital money to double-entry bookkeeping, the phrase “financial technology” may be used to any advance in how individuals transact business. Financial technology has grown rapidly since the internet revolution and the mobile internet/smartphone revolution, and fintech, which originally referred to as digital technology applied to the back office of financial institutions or financial companies, now refers to a wide range of technological interventions into consumer and corporate financial services.
Fintech currently refers to a variety of financial operations that may be performed without the help of a human, such as money transfers, depositing a check with your smartphone, bypassing a bank office to apply for credit, obtaining funds for a company launch, or monitoring your investments.
The Convenience That Fintech Brings To users’ Lives
Practicality: Fintech offers solutions to users in digital environments. This naturally adds convenience and speed to the lives of its users.
Price Advantage: Fintech doesn’t need to spend on physical structures due to their operational structures. Therefore, Fintech has a price advantage compared to classical financial services.
More Service Options: Fintech, which can provide services to its customers regardless of their location, are more diverse than traditional financial services.
Personalized Experience: Fintech has a number of technological possibilities, thanks to these facilities, firms 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.
Fintech Ecosystem in Turkey: In Turkey, according to the report; “Turkey Fintech Ecosystem,” the Fintech ecosystem is growing rapidly in Turkey. The 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, Parasut, Monitise, Odeal, My Is Yerim, Birlesik Odeme draw attention with their rapid growth and investments.
Here are two articles that might interest you:
Fintech and Government Agencies: Government agencies have a significant interest in Fintech. Because Fintech 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.
What is Fintech Service?
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.
It’s possible to examine the fintech ecosystem under four main headings; Demand, Regulation, Capital, and Human Resources. Let’s start.
Demand: This 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: These 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: This refers to the availability of technical knowledge and financial sector experience or entrepreneurial resources. Those who provide this include; the world of academia, entrepreneurs, technology companies, and traditional financial institutions.
What is Fintech Solution?
If we are considering using any Fintech solution, the points to be investigated:
• Are there any security certificates?
• Who are the references?
• Are there any users in your immediate area?
• Are there too many complaints about the firm on forums and complaint sites?
• Is the customer experience well established in the medium (for example, website) where they provide services?
- ESTEVEZ, E. (2020, August 28). Financial Technology – FintechDefinition. Investopedia. https://www.investopedia.com/terms/f/fintech.asp
- Ketabchi, N. (2019, December 24). State of the Fintech Industry (with Infographic). Toptal Finance Blog. https://www.toptal.com/finance/market-research-analysts/fintech-landscape
- Yazici, S., (2019). The analysis of fintech ecosystem in Turkey. Journal of Business, Economics and Finance (JBEF), V.8(4), p.188-197.
This article was published on 02.12.2020 and last edited on 29.06.2021. Images used in this article have been taken from free image-sharing services on the internet. Also, in this article, which is called; “What is Fintech? Guide to Financial Technology,” information freely shared on the internet was used, and necessary references were given in the article. We make every effort to offer accurate and current information. However, please do let us know if you find any errors in this article.