The roots of fintech can be traced back to 1967. That is the year when Barclays created the first automated teller machine to serve its customers. Fintech or financial technology is a new technology that improves and automates the delivery of financial services. Both businesses and consumers can benefit from fintech in their day-to-day operations and lives. Now let us take a look at some of the different categories of fintech.
Lending is one space that fintech has made more accessible and faster than ever before. Loan applications are completed online. Approval can take minutes to days, depending on the type of loan that is applied for. Fintech has even automated the underwriting process, so loan applicants never have to sign physical paper documents. Kabbage and Borrowell are two examples of fintech companies in the lending space.
Payments is a highly popular segment that fintech companies have entered. With fintech, people can easily send money to their friends or family without going through banks. Bills can also be paid easily and quickly with fintech payment platforms. Fees can be avoided, or the costs are much lower than the traditional bank route. Venmo and Circle are examples of fintech companies specializing in payments.
International money transfers used to be slow and came with hefty transaction fees. Fintech has solved this problem by speeding up the transfer rate to a matter of seconds in many cases. The fees are also much lower with fintech platforms. Ripple is a fintech company that provides international money transfer services.
There are hundreds of personal finance fintech companies that provide services such as budgeting and saving. These fintech companies can often be downloaded on a smartphone via an app and integrated with bank accounts. They help people set financial goals and reach them. Level Money is an example of such a personal finance fintech company.
Equity financing and consumer banking are two other categories that fintech has made inroads in. Some fintech companies have helped businesses gain access to financing through creative ways such as crowdfunding. Other fintech firms help connect startups needing cash to accredited investors looking for promising investments. In the consumer banking field, fintech companies such as Greendot offer an alternative to traditional bank checking accounts. Consumers can get all the services a traditional bank provides without the fees and other requirements.
Fintech firms have even gotten into the insurance market. They let people shop around and buy the insurance coverage they need. Some fintech firms have even allowed people to purchase insurance by the hour for situations such as borrowing a car temporarily. Insurance is a highly regulated industry, so most fintech firms focus on advertising and distribution and not the actual insurance product. The insurance is often offered through a partnership with an insurance company that the fintech firm works with.