What Is Fintech: Industry Trends and Impact

Fintech, an abbreviation for financial technology, refers to any technology that automates how people or businesses access financial services. Some early applications of fintech were the introduction of credit cards in the 1950s, followed by the design of ATMs, electronic stock exchanges, mainframe computers in the banking industry, and online trading stocks.

Today’s fintech examples go far beyond those to include many forms of financial technology you may be familiar with, including:

• Online banking

• Mobile banking apps

• Loan applications

• Investment apps

• Other financial transactions 

People use fintech commonly now and rarely think twice about it. For financial institutions, fintech can bridge the gap in access so that small and middle-sized companies can access the same financial services as larger companies. For consumers, it means access to more varied and expanded financial offerings, including customers underserved by traditional financial models. Below, you can explore types of fintech in greater detail and discover why the fintech industry affects all businesses and customers.

What is fintech?

Fintech is technology that automates how people use financial services. The global fintech market may reach almost $700 billion by 2030 [1]. Fintech affects banking, investing, insurance, payments, fundraising, blockchain, and many other areas. 

Using financial technology to automate financial services has become a driving force in the financial market. What originated as a way to support backend banking processes, such as servers and software applications for easier money sending and receiving, has broadened and continues to evolve. 

Fintech providers aim to be faster, serve an underserved population segment, cut costs, and provide better service. For instance, you can now apply for many financial products and services on a smartphone instead of visiting a branch salesperson. 

Types of fintech

Fintech is a key market driver, revolutionizing the way companies operate across sectors. If you work in business or finance, you may utilize many advanced types of fintech, but most people have probably used or seen the following everyday applications: 

• Using your smartphone to transfer money from your checking to savings accounts

• Paying a friend with Venmo

• Buying or selling stock online 

Some other significant uses include:

Payment apps and mobile wallets

PayPal, Square, Venmo, and Apple Pay are all examples of financial technology that people commonly use to transfer money to each other or to merchants for purchases.

Retail banking

According to the World Bank, in 2021, about 24 percent [2] of the world’s adult population had no access to a bank or regulated institution like a credit union, mobile money service provider, or microfinance institution. Fintech applications increase financial inclusion, allowing some without access to such accounts to open inexpensive accounts despite their location or lack of documentation.

Investment management

Financial advisory firms are using robo-advisors and artificial intelligence (AI) tools to change how they interact with investors. Many options for robo-advisors allow investors to sidestep traditional advisory agencies and manage their own investments using robo-advisor apps like Robinhood or Stash.

Stock trading apps

Apps such as Robinhood and E*TRADE are commonly used fintech applications that allow individuals to invest via smartphone instead of speaking with a stockbroker.

Nonprofit

Fintech has substantially impacted nonprofit fundraising. Different types of donors use fintech—such as investment platforms or online payment platforms like PayPal—sometimes giving in smaller amounts and more frequently. 

Crowdfunding 

Fintech platforms such as GoFundMe and Kickstarter are disrupting traditional funding methods, making it easy for people to invest directly in people, products, and businesses. 

Cryptocurrency and blockchain

Fintech allows you to use blockchain to buy and sell cryptocurrency from a mobile device without going through a bank or other financial services provider.

Read more: Cryptocurrency: What Is It and How Does It Work?

Impact: How fintech is changing the world

The fintech industry is on a significant upward trajectory as it changes how financial firms and the financial sector operate. According to Statista, the global digital payments market will be worth almost $16.62 trillion by 2028 [3]. According to the World Economic Forum, over half of surveyed fintech companies reported strong consumer demand as the main driver of growth in their work [4]. 

Consider the ways the fintech industry impacts businesses and consumers to better understand its global impact. 

The impact of fintech on consumers’ daily lives 

With fintech, consumers control and share their financial data as they choose, giving them more control, choice, and access to the financial services they seek.

Fintech provides access to more people and flexibility, meaning people can transact their financial activities just about any time and anywhere they have access to their smartphone and internet service. In general, fintech services also charge lower fees than traditional financial institutions. 

The impact of fintech on business  

Fintech can help businesses with faster and more efficient payment processing solutions. This is significant in an era when The Federal Reserve reports that only 16 percent of purchases made by Americans in 2023 were made with cash [5]. 

E-commerce solutions emerge from the fintech world, making it easy for customers to pay and businesses to receive their payments securely. They also provide inventory and supply chain management tools that help businesses monitor inventory levels, automate order fulfillment, and determine efficient shipping solutions.

The fintech industry allows individuals to access lending and other financial services they might not otherwise be able to. Peer-to-peer lending is one of the most utilized fintech applications, providing individuals with more control over the way they manage their finances. For example, you might decide to pursue peer-to-peer lending with an organization like Prosper or Lending Club instead of traditional lending from a financial institution. 

Fintech trends

As consumers become more tech-savvy and the banking industry adopts more fintech solutions, new trends continue to emerge as fintech companies compete to release cutting-edge technology. Some of the trends include:

• AI and machine learning automate banking processes such as loan approval and fraud protection. They also provide insight into customer behavior, which helps businesses target customers more efficiently while cutting costs.

• Software as a service (SaaS) lets companies take advantage of software applications in the cloud instead of incurring the cost of keeping them on their own servers.

• Many fintechs may look to mergers and acquisitions (M&A) to become more competitive and sustainable. 

• Efforts to protect digital identity continue evolving as scams get more aggressive and sophisticated.

• Fintech companies are increasing their focus on meeting high standards of regulatory compliance.

• Fintechs are personalizing offers more to the specific needs of consumers. 

• Embedded finance is increasing, letting more non-financial businesses offer more financial services.

• Generative AI is playing an increased role, not only with customer service chatbots but also in generating reports, valuing assets, and creating financial summaries for individuals and businesses.

Getting started in fintech

Getting started in fintech means beginning with the basics. Consider taking courses in blockchain technology, AI, and machine learning. Other subjects to consider to make yourself a more valuable applicant include understanding financial concepts, computer technology, data analytics, and commonly used software. While entry-level jobs require different skills depending on the work, many potential employers will appreciate interpersonal and communication skills. Consider applying for internships at fintech startups, which are a great way to get real-world experience in the industry. 

Getting started with Coursera

Fintech, or the technology people use for digital financial transactions, is changing how businesses and individuals access financial information, create insights, and manage transactions. This industry already offers many types of jobs, and it continues evolving as the field disrupts the world of finance and banking. If you’re interested in a career that utilizes fintech, one way to start is by getting specialized training and demonstrable skills to showcase on your resume. 

Learn more about the world of fintech with Fintech: Foundations & Applications of Financial Technology Specialization or Financial Technology (Fintech) Innovations on Coursera.