Fintech is an amalgamation of the words “financial” and “technology.” The term refers to the rapidly growing number of tech-powered tools and applications that help you manage your money.
This can be as simple as an online banking portal and as complex as a cryptocurrency exchange. The critical element that makes fintech so important to 21st-century consumers is that it makes financial services faster, more accessible and easier to understand.
Let’s examine the rise and benefits of innovative fintech solutions and how this burgeoning area of the tech sector can impact your wealth and money management in 2024.
The rise of fintech: Why has fintech exploded in recent years?
Technology isn’t new. Even modern tech has a track record that stretches back decades. So, why has fintech become so crucial in the past 15 years?
While applying technology to finance has been a practice since the mid-20th century, these developments occurred in the finance sector’s back end. Consumers weren’t privy to the changes until the turn of the century.
It wasn’t until the advent of smartphones that financial technology experienced what Columbia Business School calls a “Cambrian explosion of innovation in Fintech.” Once available, fintech rapidly developed to meet the evolving needs of consumers in a digital age.
In the years since, traditional financial institutions have struggled to keep pace with the change, opening the door to various independent, nontraditional innovation opportunities. Some of these are simple solutions, while others have created new worlds in consumer finances. Let’s take a look at some examples.
How fintech makes finance easier and more accessible
It’s difficult to summarize how much fintech has revolutionized finance. On the one hand, simple day-to-day personal finance has become much more manageable.
You can now remotely manage your money using tools and applications such as online banking portals and banking apps. Digital wallets give you instant access to cash on the go. You can even directly deposit your paycheck, use bill pay to automate your payments and deposit checks from anywhere using your smartphone.
At the same time, there have been more dramatic changes. Online brokerage platforms let you invest in stocks in just a few clicks. Robo-advisers automate investment management. Cryptocurrency offers alternative investments to fiat currency. Crowdfunding and peer-to-peer lending have also allowed consumers and businesses to cut out the middleman of traditional financial institutions.
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Understanding the benefits of fintech
It’s fascinating to see all of the ways fintech is rewriting personal and professional finance. But what are the tangible benefits that these innovations offer? Here are a few of the top benefits that come with fintech:
- Convenience. I’ve already touched on this one, but it’s hard to overstate. Fintech’s most vital attribute is making finance quick and easy for the average person.
- Accessibility. Fintech’s digital nature makes it easy to access from anywhere. Along with helping consumers access and manage money already, this has incredible potential to continue helping unbanked or underbanked populations improve their economic status.
- Loyalty. Fintech doesn’t just save extra steps and fees. It is allowing consumers to rebuild a system of peer-to-peer trust and loyalty. Both attributes are core philosophies at my fintech firm, Fintech Finance Group.
- Cost. Fintech cuts out much of the work and needs of traditional banks, brokers and other financial intermediaries. This can dramatically reduce the cost of doing business.
Fintech already offers many benefits, and many more will doubtlessly emerge as this area develops.
Using fintech to master your money in 2024
Fintech is rewiring the financial world. It is decentralizing finance and improving money management in ways that weren’t imaginable a quarter of a century ago.
While already a force to reckon with, fintech is still evolving. Given its impressive capabilities and influence, it’s hard to imagine that we’ve only scratched the surface of this synergistic combination of finance and technology.
With that in mind, make sure to continue to educate yourself. Always look for safe, fresh ways to leverage fintech as you manage your finances, cultivate wealth and establish greater financial security for you and your loved ones.
