Fintech is the combination of finance and technology (FIN + TECH). While it was originally used to describe new companies used technology to compete with banks in financial services, it now applies to banks, startups and any company that uses technology to make finance faster, cheaper and more accessible.
Fintech has been around since technology has been used to improve financial services. This goes back to the introduction of the first ATM in the late 1960s. However, what we consider to be "fintech" today is the use of technology to completely rethink the way we interact with money and challenging incumbent players (banks) to keep up. For that reason, fintech is usually said to have started after the Global Financial Crisis (GFC).
Fintech can apply to a number of different financial services and products. In banking, it's any bank that is offering tools to help you manage your money better through your app or automatically categorise your expenses. There is a new range of banks that are exclusively developing products like this called in Australia digital banks or neobanks.
Buy now pay later is another huge market in fintech. Services such as Afterpay, Zip, Klarna bundll and Humm allow people to spend with merchants and then repay in installments. These platforms combine tech and finance to offer innovative solutions to consumers including digital receipts, budgeting tools and more.
Robo advisors that help you automate your investments are another example of fintech, as are insurance companies that are using technology to help you lower your premiums or customise your policy.
There were many drivers behind the development of modern fintech. This included a loss of faith in traditional banks, people losing money and property during the GFC and new financial regulations that were introduced because of it. All of these things and more saw the formation of startups trying to do finance differently and using technology to do it more quickly and cheaply. Fintech today has been extended beyond the realm of startups; it has been embraced by banks and companies worldwide and found its way into nearly every corner of finance.
Here you can find out the latest fintech news for Australia as well as product reviews and explainers.
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