“Fintech is about making finance more human, by making it less complicated.”
Ever used Google Pay to split a dinner bill? Checked your credit score on an app? Bought insurance online in 5 minutes? But have you ever wondered what the driving force behind it is, and what it's called? And how digitalization has led to the evolution of the financial sector.
The catalyst is called Fintech, which has grown from basic banking technology into a force that has changed the financial services world. Banks first utilized it to track and manage client accounts. Now, fintech solutions cover a wide range, from consumer budgeting apps to sophisticated investment management platforms.
This article will help you understand what fintech means. You'll learn how fintech works and discover different types of it.
In a world powered by data, fintech is the new operating system for the finance industry. Fintech is the short form of financial technology, which refers to the use of technology to improve and automate financial services. It combines finance with innovation to make banking, investing, lending, insurance, and money management faster, easier, and more accessible.
Fintech can range from using a mobile app to transfer money to utilizing artificial intelligence for fraud detection or investment advice.
The digital world has changed how businesses work, compete, and help their customers through financial technology. Fintech is not just a tech upgrade. It is a vital business tool that decides which companies succeed and which ones lag behind.
Companies must accept new ideas in fintech or risk falling behind more flexible competitors. The benefits go beyond saving money and create lasting competitive advantages.
Financial operations have resisted digital change the most due to old systems, rules, and fear of risk. State-of-the-art fintech tools solve these problems with specialized solutions that update financial tasks. Corporate finance teams see big improvements in everything from cash management to financial planning.
Mid-sized companies have gained the most benefits. About 68% report successful digital changes led by fintech. These companies completed their projects in half the time it takes for traditional software rollouts.
Fintech's biggest business value comes from its effect on customer relationships. Customers now expect the same ease of use and customization they get from tech giants. This applies to all service providers, including those in the financial sector.
Financial problems often cause customer unhappiness and loss. Companies that use fintech to simplify payments, credit applications, and account management see better customer results. Adding fintech to customer service speeds up time-sensitive tasks. Fintech has grown from a back-office tool into a main driver of customer experience.
Financial processes are becoming part of everyday business operations. The line between financial and business services keeps getting thinner. This joining creates one of the biggest chances for forward-thinking companies to reshape how they work and connect with customers.
Companies in every sector now find that fintech solutions do more than just upgrade technology - they deliver real bottom-line results. The pressure to streamline operations and create better customer experiences makes fintech a vital driver of business transformation, with a measurable return on investment (ROI).
Companies that implement fintech solutions see substantial improvements in multiple performance areas. These technologies now deliver real business results that boost competitive edge and financial performance, moving beyond theoretical benefits.
Fintech makes business processes run smoother through advanced automation, removing unnecessary steps that used to slow things down. Companies using fintech solutions have achieved up to 65% improvement in operational efficiencies,
which opens up major growth opportunities. This boost comes mainly from replacing error-prone manual processes with automated workflows.
Fintech accelerates both incoming and outgoing payment processing. It also makes back-office operations run more efficiently by identifying unnecessary steps and bottlenecks through data analysis.
Beyond running better, fintech cuts costs in ways that directly boost profits. Companies that modernize with fintech report cost savings, which frees up money for other strategic projects.
Cloud-based fintech solutions work especially well for managing costs. A mid-sized bank that moved to cloud operations saw its infrastructure costs drop by 70%. This big drop comes from the cloud's pay-as-you-go model, which cuts initial technology costs while making it easier to scale up.
Scalability stands out as one of fintech's most valuable features for growing companies. Unlike old financial systems with fixed limits, modern fintech platforms adjust naturally to changing business needs. Cloud platforms like Microsoft Azure and AWS let organizations scale IT resources up or down as needed.
Fintech's biggest impact comes from enabling evidence-based decision-making (EBDM). This method relies on data and analysis instead of gut feelings to guide business decisions, creating better foundations for planning.
Financial institutions using EBDM see several benefits:
Data analytics explains customer behavior, market trends, and risk factors, which leads to smarter decisions across the organization. Predictive analytics helps businesses spot trends or challenges early and take action, moving from reactive to proactive management.
Financial companies use customer transaction data to create personalized products that meet individual needs, such as custom credit cards and investment portfolios. Investment banks use market trend data and investor behavior to develop innovative products, such as derivatives and structured finance options.
Every fintech breakthrough has a complex technical setup that makes it work. Business leaders need to understand these mechanics to select the right solutions and integrate them into their current operations.
Application Programming Interfaces (APIs) are the basic building blocks of today's fintech ecosystem. These software intermediaries enable different financial apps and systems to communicate with each other and share data securely. APIs work as bridges between financial institutions and third-party services. They make information flow easier while maintaining high security standards.
Financial API integrations work through different models in practice. Partner APIs connect financial institutions and apps directly one-to-one. Open APIs link many institutions to numerous fintech applications through central data networks. This setup has created what experts call "a connected, open, and transparent array of new financial services".
Artificial intelligence and machine learning have evolved from experimental technologies into vital components of fintech operations. These technologies enhance various aspects of the financial services industry. They automate complex processes and find patterns in big datasets.
These technologies also handle mundane office tasks, such as data entry, invoicing, and payment processing. Banks that use AI to check and approve loans now work much faster. Teams can identify inefficiencies, assign tasks more effectively, and focus on important work when they incorporate these technologies into their daily operations.
Fintech apps need strong security measures and compliance frameworks because they handle sensitive financial data. Multi-factor authentication is a standard security feature. It needs several ways to check who the users are. This includes things users know (such as passwords), have (like phones), and are (like biometrics).
The fintech sector needs to follow strict rules because it handles sensitive financial information.
Fintech companies must monitor user behavior, system activity, and network traffic in real-time. This turns security from a reactive to a proactive approach. Companies can identify and address potential threats before they cause damage.
The fintech ecosystem includes a wide range of solutions that address specific financial needs and challenges. Companies need to understand different types of fintech offerings to make smart technology partnership decisions.
Digital banking refers to providing banking services through digital platforms like mobile apps, websites, and even WhatsApp. It eliminates the need for physical visits to branches, making banking faster, simpler, and always accessible. In India, this transformation has been groundbreaking.
Fintech lending platforms utilize technological breakthroughs to reshape how credit is assessed, approved, and distributed. These platforms utilize advanced data analysis to gain a better understanding of creditworthiness. AI-powered credit scoring models form the core of fintech lending, solving problems that traditional methods can't handle.
Wealth management fintech solutions have changed how people access investment services. Robo-advisors stand out as one of the most meaningful innovations. They use smart algorithms to build and manage diverse investment portfolios that cost much less than traditional services.
Insurtech brings tech innovation to find savings and boost efficiency in the traditional insurance industry. Regtech also uses technology to improve regulatory compliance across the financial services industry.
“The future of finance is not about banks, it’s about banking everywhere.”
Financial technology continues to mature, and forward-thinking enterprises are moving from tactical implementations to strategic ecosystem positioning. Tomorrow's financial technology world promises deeper integration with business processes through two revolutionary developments.
Open banking brings a fundamental change to the flow of financial data between institutions. It enables the secure sharing of customer financial information, with proper consent, through standardized APIs. This creates a connected ecosystem where financial services become available components rather than siloed offerings. Open banking also forms the foundations for embedded finance, which brings financial services directly into non-financial customer experiences.
Embedded finance helps companies tackle multiple business challenges at once:
This model extends beyond tech giants, retailers, telecom providers, and automotive companies, all of which are learning about embedded finance opportunities.
AI revolutionizes how enterprises deliver financial services by enabling live personalization on a large scale. These tools analyze historical data to identify patterns and forecast trends, which enables companies to:
Companies that will succeed are those that position themselves strategically within these emerging ecosystems, either as infrastructure providers or as customer-facing platforms that exploit the new financial architecture.
Fintech has grown beyond simple banking technology into a key business advantage that defines how companies work and compete. Digital banking, lending platforms, and investment tools help companies work more efficiently, reduce costs, and better serve their customers.
Companies that use fintech grow revenue faster, achieve better customer satisfaction, and work more efficiently. These results come from automated workflows, improved data analysis, and efficient financial processes that give companies a competitive edge.
Open banking and AI-driven individual-specific experiences will reshape the financial services scene. Companies need to get ready for this change. They must evaluate their capabilities, pick the right strategies, and follow regulations. Quick adapters will gain market advantages through better customer service and operations.
An IIM Calcutta Fintech course can provide you with the skills to master strategies and gain in-depth knowledge of financial technology, as Fintech continues to move forward at a rapid pace, so your business needs to adopt it strategically to succeed.
Start by looking at your company's needs and problems. Then, create a clear plan to use fintech solutions that align with your goals by gaining expertise in financial technology.
Fintech goes beyond new technology because it changes how your business serves customers while making operations better.
Q1. What is the meaning of fintech in simple words?
Fintech means using technology to make financial services easier, faster, and more accessible. In simple terms, it’s when apps, websites, or software are used to help people manage their money, such as sending payments, investing, applying for loans, or buying insurance, without needing to visit a bank.
Q2. What are the Examples of Fintech?
All of these are examples of fintech in action. It combines finance and technology to improve how we manage money in everyday life.
Q3. Is Fintech a Good Career?
Yes, fintech is a great career choice, especially for those interested in both finance and technology. It’s a fast-growing industry offering roles in areas like data analysis, product management, cybersecurity, software development, and digital banking. With the world moving toward cashless payments, AI-driven finance, and financial inclusion, fintech professionals are in high demand. It’s a field with strong growth potential, good salaries, and opportunities to work on innovative, impactful solutions.
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Debunking Top 5 Myths about FinTech
Like every other industry sector, the financial landscape is changing remarkably. With constantly evolving technologies, new global regulations, and increased investment, the industry is growing faster than ever. Of all the trends, the introduction of FinTech remains the most prominent, redefining and disrupting financial services and products in the last decade. However, since it is new, there are bound to be little or no understanding of how FinTech works and serves the changing market needs. Like any new revolutionary technology, there are certain expectations, beliefs, and predetermined notions associated with FinTech, thus fuelling many myths and rumors. To be able to understand the mechanisms of FinTech better and exploit its full potential, we must dig deeper and debunk those notions, one myth at a time.
FinTech, by its very definition, is a broad spectrum of things, involving different kinds of programs and applications. But, more often than not, they are categorized under the same head. As mentioned earlier, the finance industry is radically changing and emerging with newer products and services like money transfer, wealth management, lending, payments, to name just a few. And each of these subdomains of finance can make the most out of FinTech applications, designed for the respective function. Hence, they cannot be the same. Like every other technology, no two financial tech tools are designed the same way or can fulfill the same need. So, before you decide to opt for a FinTech solution for your finance business, it is important to explore the others and see what suits your business architecture and meets your and your customer’s needs.
There is a popular rumor going around that banks and FinTech services are at loggerheads and FinTech will most probably win the battle by bringing the banking system to an end. This is perhaps the biggest misconception surrounding this new technology. FinTech evolved as a natural course of development in the banking process. The technology is rather a catalyst to the banking system to streamline and expedite processes and functions and enhance the customer experience. This fear is very much like that of AI, when it was first introduced, making people believe that it will wipe out human intervention. In reality, it assisted manual functions and enhanced productivity and performance. Similarly, with innovations in FinTech, banking services are only going to evolve and become more efficient and take the sector to the next level.
Perhaps the words Finance and Technology together have led people to believe that it has everything to do with money. But it is a myth. Although about 80% of FinTech investments* (global) so far have been in lending and payment systems, it is still not a defining parameter. FinTech’s applications reach way beyond monetary transactions and extend to insurance, fraud detection, investment management, marketing provisioning and so on. FinTech also has immense capability to provide refined data analysis, which is becoming increasingly popular among financial service enterprises.
Being a digital product, there is a lot of concern regarding the security protocol of FinTech. But that also applies to any digital tool or new technology product. However, if we see beyond the facades, evolved technologies like cloud computing have ample capabilities to keep FinTech secure. Also, as with any other tech innovation, there is a constant effort on managing security issues at every step and addressing threats or probable areas of hacks. With advanced security measures, fraud detection, and better encryption standards, FinTech will soon prove to be a reliable and convenient platform.
Most people think that like many new technologies, FinTech is just a ‘bubble’ and with changing economic regulations, it will soon burst. Government regulations are inevitable. But that doesn’t mean it can wipe out an entire system that is being built. FinTech leaders are quite aware of these possibilities and are leaving no stone unturned to partner with the Government and make it an integral part of economic development. Also, in many countries, the Government is actively involved in developing FinTechs and exploiting its potential for better financial services to the citizens.
The world of finance is diverse and can reap a lot of benefits from FinTech if applied right. But only when one understands it well and avoids the myths, can one see the real advantages. With many new trends like dedicated FinTech centers, specialized funding for FinTech companies, AI-powered insights, and growth of predictive analytics, this technology space will only grow bigger and better.
Top 5 Areas to Explore in FinTech Careers
FinTech is an industry born out of the marriage of the ever-green financial services sector and the new millennium’s technology industry. This industry offers financial services to people by leveraging software and technology. Some examples are online banks, peer-to-peer lending platforms, Robo-advisories, mobile payment firms, etc.
The FinTech industry has been disruptive right from the start and has succeeded in redefining various ownership-based traditional financial services models. FinTech has replaced them with a democratic model and made financial services easily accessible to people. Over the last decade, this industry has grown exponentially, creating a huge demand for professionals with FinTech-specific capabilities. In this article, we will share five skills that can ensure a great start to your FinTech career.
Continuing with the trend from 2019, financial institutions are expected to increasingly develop or adopt capabilities pertaining to machine learning and artificial intelligence.
The FinTech market in India is expected to cross $31 billion in 2020.
~ Amitabh Kant, CEO, NITI Aayog
The Indian FinTech industry is the third-largest in the world and is expanding at a great pace. Hence, to ensure a rewarding FinTech career, it is important to equip yourself with skills that are in high demand in the industry. Here are the top five options:
Blockchain professionals are in demand across different segments of the FinTech Industry. The growth and rise of cryptocurrencies laid the foundation for an ever-increasing demand for professionals specialising in Blockchain technology. While most people understand the theory behind this technology, not many professionals can implement it successfully. Blockchain experts can expect handsome salaries and a FinTech career that helps you grow at a thrilling pace.
One of the best ways to kick-start your FinTech career is by acquiring programming skills in C++, Java, C#, JavaScript, SQL, and Python. There is a rising demand for programmers who can develop full-stack platforms, websites, and above all, mobile applications in this industry. Programmers are also needed for developing APIs of new services and products. Moreover, programming skills can also open many other career avenues for you.
We are generating more data than ever before. Organizations have access to useful data that requires analysis, scrutiny, and interpretation. This is the only way to convert volumes of data into useful information. This is where professionals with knowledge of technologies like Artificial Intelligence, Machine Learning, and Deep Learning are in demand. These professionals are the definition of skilled humans working with smart machines to create innovative products and services and gain better customer insights.
Cyber security jobs are growing in number with not enough talent to fill the vacancies. In fact, Cybersecurity Ventures has predicted that by 2021, around 3.5 million cybersecurity jobs will be unfilled. This is a great opportunity for you to start your FinTech career. FinTech startups are especially vulnerable to cyber-attacks and malicious threats. All FinTech companies, large or small, are constantly on the lookout for new talent in cyber security to help safeguard them against the latest threats and ensure their financial and reputational security. As a cybersecurity expert, the sky will be your limit!
Although the industry is all about leveraging technology, you cannot succeed without the right soft skills. The world is changing and so are the people in it. Hence, successful professionals require a specific set of soft skills to catapult them ahead of their peers and steer their careers in the right direction. These include people skills like communication, emotional intelligence, empathy, problem-solving skills, flexibility, and adaptability. Be a learner and develop these skills while on a job or as a part of life. You can also join soft skill courses for the same.
A successful FinTech career requires you to learn the skills that are in demand in the industry and expected to remain so in the near future. The technology industry is volatile and newer technology brings newer skill requirements. However, the skills mentioned above are in their development stages making it the right time to learn them and start a career in the growing FinTech industry.
How FinTech Expertise Can Help Senior Finance Professionals?
Just a few years back, it was hard to imagine a bank going paperless and branchless. It was almost fictional to think of money transfer being done instantaneously–whether within a city or across borders. It was magical to conjure up the image of a loan that can be availed with just a few clicks and minimal documentation. Yet, all these are part of the new banking, financial services, and insurance (BFSI) sector impacted by FinTech today. In a short period, the BFSI sector has embraced so many technology shifts. Today the sector has changed so much with the adoption of,
FinTech has redefined the industry beyond recognition. It has wiped away long queues, manual exhaustion, bureaucratic fatigue, and process-delays. FinTech has leveraged Artificial Intelligence (AI), Blockchain, and Cloud in such a pervasive and swift way that it has cut costs and created new revenues.
As per the PwC Global FinTech Report 2019, 48 percent of Financial Services organizations have embedded FinTech fully into their strategic operating model, while 37 percent of Financial Services organizations have incorporated emerging technologies into the products and services they sell. These developments raise a few questions.
For them, this is the right time to get a little braver and smarter to deal with the current predicament. It’s both possible and imperative to evolve their kit of competencies considering the new world order. They can add to and augment their Banking and Finance expertise by learning the new tools that AI, automation, and Cloud present. To add to that, if you are already in a C-Suite position, it is even more critical to gain the right FinTech chops so you can help your organization stay relevant and robust in the unfamiliar landscape. At this point, it is interesting to note,
As a senior Finance professional, getting up to speed on the new reality is crucial.
To upgrade themselves with newer capabilities and stay relevant, senior Finance professionals can tap into some well-crafted FinTech courses available at many good institutes today. Some of these courses are designed with a lot of flexibility and ease to take them online in an interactive and engaging environment, coupled with rich networking opportunities with industry experts and peers.
Once armed with the FinTech expertise they lack now, these senior Finance professionals can leap forth with so many advantages hard to catch up to for even the sharpest FinTech natives today. The geeks’ technology know-how can be exponentially empowered with senior finance professionals’ rare and hard-earned expertise. It opens up so many avenues in strategic, operational, and management roles that the new breed of FinTech companies want to fill as soon as possible.
There is a shortage of senior expertise at even the most future-forward FinTech company. It has been observed that 75 percent of Financial organizations are creating jobs related to Fintech, but 42 percent struggle to fill the roles. In the PwC 22ND Annual Global CEO survey, one finds that if ten years ago, only about 50 percent of Financial Services leaders saw skills shortages as a threat to their growth prospects, the number has risen to a staggering 80 percent today. It is going to worsen as disruption gets deep and wide.
As much as two-thirds of Financial Services organizations are concerned about the availability of FinTech skills among their senior leadership team and across the sector as well. The situation is full of both concerns and opportunities–as you can surmise reasonably.
This is the right time to learn the new language that the FinTech tribe speaks in. Once that’s in place, you can bank on your rich métier with new confidence and power. With all that experience under your belt, your learning curve would be very short.
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