The rise of Fintech
Fintech aka financial technology is a catch-all term referring to software, mobile applications, and other technologies created to improve and automate traditional forms of finance for businesses and consumers alike. Fintech can include everything from straightforward mobile payment apps to complex blockchain networks housing encrypted transactions.
While fintech seems like a recent series of technological breakthroughs, the basic concept has existed for some time. Early credit cards in the 1950s generally represent the first fintech products available to the public, in that they eliminated the need for consumers to carry physical currency in their day-to-day lives. From there, fintech evolved to include bank mainframes and online stock trading services. In 1998, PayPal was founded, representing one of the first fintech companies to operate primarily on the internet — a breakthrough that has been further revolutionized by mobile technology, social media, and data encryption. This fintech revolution has led to the mobile payment apps, blockchain networks, and social media-housed payment options we regularly use today.
While fintech is a multifaceted concept, it’s possible to understand it. Fintech simplifies financial transactions for consumers or businesses, making them more accessible and, generally, more affordable. It can also apply to companies and services utilizing AI, big data, and encrypted blockchain technology to facilitate highly secure transactions within an internal network.
Broadly speaking, fintech strives to streamline the transaction process, eliminating potentially unnecessary steps for all involved parties. For example, a mobile service like Venmo or CashApp allows you to pay other people at any time of day, sending funds directly to their desired bank account. However, if you paid instead with cash or a check, the recipient would have to make a trip to the bank to deposit the money.
Over the years, fintech has grown and changed in response to developments within the wider technology sector, globally, and in the Caribbean. Recently, this growth has been defined by several prevailing trends. For example, digital banking continues to grow and is easier to access than ever before. Many consumers already manage their money, request and pay loans, and purchase insurance through digital-first banks.
What is new is the blockchain technology which allows for decentralized transactions without a government entity or other third-party organization being involved. Blockchain technology and applications have been growing quickly for years, and this trend is likely to continue in 2022 as more industries turn to advanced data encryption. Of course, this is an individual choice to utilize any new financial technology, so do your due diligence and research before using any financial platform.
Subrina Hall-Azih is a Trinidadian educator residing in New York.