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Today, with the advances in technology, few people prefer traditional methods of operations. The tech-savvy customers no longer need traditional finance methods to meet their expectations. For example, who wouldn't prefer banking with just a click of a button on their smartphones?
Fintech software development has achieved huge momentum due to advancements in technology, influencing businesses of all sizes as well as customers. It is utilized to simplify companies' operations and the lives of owners and consumers simultaneously, with seamless management of their financial functions, processes, and operations with advanced technology.
You may want to know more about fintech's meaning and purpose. Check out this guide to learn more about fintech.
In This Article:
What Is Fintech?
Fintech is broadly defined as the evolution or rebirth of one of the most sensitive industries, the financial industry. With the innovation of fintech, new technologies have developed to simplify, automate, and streamline financial functions. When we discuss the financial industry, it is crucial to understand it is more than what we think of.
The backend systems of financial institutions were the primary focus when the term "fintech" first appeared in the 21st century. However, today, the fintech industry includes mobile applications, blockchain, cryptocurrency, online banking, investment, and many more. In a nutshell, the emphasis switched to a collection of consumer-focused services rather than just a backend system.
Let’s take a look at different significant stages in the evolution of fintech before examining how it will be involved in the future.
A Brief History of the Fintech Evolution
The evolution of fintech went through three important eras. Each era defined fintech with a differentiated edge based on how consumers interacted with money.
Fintech 1.0
The history of fintech began after the century when there was only one backbone in the financial business world—The Bank. Throughout two centuries, that is, the 19th and 20th, banks were believed to be the most tech-forward and trusted source for any financial business activities. The greatest and life-changing event of all time was in 1950 with the invention of credit cards by Diners Club, and the second most prominent change was with the first ATM in 1969.
Fintech 2.0
A significant change in the fintech industry came in 1971 with NASDAQ and the world's first setup of the electronic stock market. This setup significantly changed how the bidding was done, and IPOs were processed quickly; SWIFT, now the most popular communication system for cross-border payments, was introduced in 1973.
Fintech 3.0
One of the earliest fintech advancements in 1998 was PayPal. Unlike other payment competitors, PayPal was a stand-alone platform that did not depend on banks to scale or find customers. We all know their history—PayPal became the backbone of online payments.
Fintech’s new millennium innovation
Today, fintech is nothing new. You have been using it in your everyday life like a pro. Yes! Aren't you using Google Wallet in your daily life? That is a fintech innovation. With the turn of the century, fintech brought us even more exciting innovations in financial technologies, including mobile payments apps, blockchain networks, bitcoin, facial recognition payment, social media housing payment options, and so on.
The evolution of fintech went through three important eras. Each era defined fintech with a differentiated edge based on how consumers interacted with money.
How Does Fintech Work?
The fintech landscape has quickly changed the financial boundaries. From credit cards and ATMs to personal financing apps and high-frequency stock market and trading, the industry has turned upside down. The primary aim of fintech is to simplify the financial transactions of businesses and consumers. The software not only makes it more convenient but also affordable.
Fintech simplifies the transaction process by eliminating unnecessary steps for either party in financial transactions. It also applies to companies and services that utilize AI, big data, and blockchain for more secure and large transactions on the internet. However, the nature of financial technology varies from application to application and from project to project.
No matter what the goal of a fintech application is, it needs to comply with regulations. Implementing regulations will ensure security and safety for financial institutions and businesses providing services and also customers who use them.
Fintech Regulation
Fintech regulators often face concerns such as investment fraud, cybersecurity, compliance, and blockchain integration. Globally, fintech compliance checklists were created to boost the credibility of the fintech domain.
Banking License
Like traditional financial institutions, there are regulations and licensing for fintech firms, too. Globally, it is ensured that fintech ventures follow the laws and regulations. Certain fintech activities such as accepting deposits, investments, lending, insurance, and many more require licensing.
Payment Systems
Regulatory requirements for payment systems may vary across the world. The most common concerns around payment systems are risk management, cybersecurity, data protection, and consumer security. All these apply to payment systems universally.
Licensing of Stablecoins
Regulatory approaches for stablecoins have started to evolve. All other crypto assets also come under the jurisdiction of the regulatory framework. With big tech's potential involvement in global stablecoin arrangements, policymakers tend to appreciate such initiatives.
Find the difference between FinTech and RegTech here.
Fintech Examples
The increased technology has brought many changes and also risks for financial institutions. Staying committed to compliances will change that. The financial sector moves quickly, and new technologies come up, making a hallmark in the industry. Here are some great fintech examples.
Banking
The fintech concept has proven revolutionary in the banking sector. Fintech impacts the banking industry and has changed the way banks work. The traditional banking system acted as a gateway to payment services. However, customers always complained about the lack of ease and access to their accounts. Fintech has made banking easy and proved the advantages of mobile banking.
Digital payment platforms like mobile banking, internet banking, and wallets have brought the desired ease to customers.
Cryptocurrency and Blockchain
One of the best examples of fintech disruption is blockchain technology. Blockchain is the underlying technology that cryptocurrency operates on. Its secure way of recording and transferring information has brought more transparency to the financial sector.
Cryptocurrency, a digital currency, is preferred by users because it is impossible to counterfeit it or double spend. No matter how controversial these two fintech products are, they have started a new era in the finance domain, with more and more companies creating their own currency.
Investment and Savings
Recent times have changed the way we save and invest. The AI-based apps have made managing your funds easy. You can link your bank account to these apps and track your spending in real-time. These apps also provide insights into your expenditures and allow you to set a budget.
The algorithm-based fintech products put aside a portion of your income by tracking your last month's spending. These apps promote smart savings and investment. The combination of savings and small-portioned investments, as suggested by such fintech products, aptly introduces customers to the markets.
Machine Learning and Trading
Machine learning and AI have changed the old ways of trading. The algorithmic-based trading supported by the data-driven ML and AI models has successfully changed the traditional rule-based trading system. If you are an investor, you might have hands-on experience with the latest stock-trading apps. There is no longer a need to transact directly with the stock exchange to buy or sell stocks.
The trading platforms utilize artificial intelligence 'robo advisors' to trade at optimal prices. Fintech has made stock trading so convenient and smart that even an amateur can trade like a pro. Trade forecasts and trends have mitigated market risks to a great extent.
Payments
Advanced technology has been reshaping the way payments are made. There are non-bank payment options that are fast, reliable, and secure. The digital payment system has enabled users to make payments from any part of the world without any processing delay. Cashless transactions have lowered the risk of theft and fraud.
Fintech has made financial management easier. It is easy to keep a tab of your spending. Earlier, you had to stand in long queues to get your bank account statement. These days, you can access your statement with one single click. There are rewards and cashback offers for making online payments. All of it has turned out to be a great motivation to use a digital payment system.
Lending
One of the most profitable domains for any financial institution is its loans and lending services. Fintech has enabled the digital lending process for issuing loans online. Have you ever wondered about the backend process of loan approval? Why are there delays? Why aren't your loans getting approved? Why couldn't you get your desired loan amount? You don’t always get answers from your bank.
The digital lending process is transparent. It communicates your creditworthiness and allowed loan amount. The repayment schedule is easy to manage. You can choose which EMI option suits you the best and also select the period of repayment.
Insurance
Fintech developments have transformed the insurance sector in the past few years. The rise of InsurTech has enhanced the consumer experience and made policy purchase an easy task. Several fintech startups in the past few years have allowed users to compare various policies and provide data-driven insights to get the best benefits.
Besides, many fintech startups are partnering with insurance companies to help automate the process and survive the technological revolution. Compared to other sectors, insurance has seen a slow transformation. However, it has picked up the pace now and is utilizing financial technology to reap the maximum benefits.
The success of fintech ventures and tie-ups can be measured through the vast periphery of top fintech companies that have been setting new benchmarks with their pioneering fintech services. Here’s an overview of some of the top fintech ventures.
Top Fintech Companies
Fintech being a booming industry, it is not surprising that there has been an explosion of fintech companies and startups. Here's a list of the top fintech companies for a clearer view of the current space:
Known for streamlining compliance with an AI-based product, Behavox has an award-winning team of professionals that efficiently manage implementation and integration processes. Their compliance model works straight out of the box and effectively catches the bad actors hindering your business's growth. Behavox provides compliance for asset management firms, hedge funds, private equity funds, and banks.
As blockchain and cryptocurrency experts, Chainalysis is known for creating data platforms for banks, businesses, and governments to create transparency and understanding of how to use cryptocurrency. Chainalysis offers compliance and risk management tools to minimize fraud and promote consumer access to cryptocurrency.
Robinhood makes investment easier. The company allows you to build your own trading portfolio at optimum prices. As a crypto exchange, they allow users to dive into the crypto world without a commission fee. With Robinhood cash cards, you can earn weekly rewards as you spend. They give you data-driven insights to become a better investor.
Coinbase is one of the most convenient places to buy and sell cryptocurrency. You can create a portfolio and manage it by keeping track of your investments. They also provide additional vault protection for all your funds. You can use their mobile app to access your portfolio on the go.
Now that you have seen top fintech companies, you might be wondering what advantages fintech provides that it keeps gaining popularity in the financial industry.
Advantages and Disadvantages of Fintech
Let’s get into more details about fintech's advantages and disadvantages.
Advantages of Fintech
- Opens the doors for more money. Possibly the foremost advantage that most consumers look for. The good news is that the most visible advantage of fintech may be that it can create a huge amount of money and has a positive effect on the future of money. Not only does it help with money, but it also decreases the trading price with capital or diminishes the price of opening new stores for goods and services.
- Fintech democratizes economics. Whether it is traders or modern class perfections, not everyone has a chance to be independent economically or find a way to do the same. Often, it is a game of dice. Opportunities or possibilities are blocked at the time of birth or by the state's regional economy. Also, it reduces global economic risks.
- The financial industry is like a see-saw; it needs balance in every aspect of the domain. If one side goes down, it affects the other operations. The global financial climate is highly complex, and there are many rooms to hide unfair behavior. For this reason, using creative instruments to differentiate models of unusual or unfair activity has become highly imperative. Accepting fintech will promote clearness and decrease the influence of unfair people.
Disadvantages of Fintech
- Some personalities are left behind. With technological change, there will be some loss. Mechanization is crucial here. Machine learning and robotics are a hit in every industry; it might become possible to keep human requirements at their peak. On the contrary, there will be drastic changes to the requirements of human work, which might be a cause of concern.
- It can provide a global imbalance. Fintech and digital technologies go hand in hand. There is no doubt that to combine finances and technology, you will need access to certain things, such as broadband internet, data stations, smartphones, wireless access, and the currency base. It is not a problem when everything is accessible; however, many of the world's communities don't have a way to access the required technology. Besides broadband, some parts of the world are so poor that even the internet is absurd. This downside can create a global imbalance.
- It can ruin privacy. Privacy is the biggest concern when finance transforms into digitization. There is no doubt privacy is essential for every party in fintech, as those who have your financial information can easily have access to all your other financial activities. There are things to accomplish and prevention measures to avoid miscellaneous theft.
The fintech market is in constant growth globally due to the number of advantages it offers. However, the success also widely depends on how fintech is created and how it promises to change the space.
How to Develop a Secure Fintech App
Building mobile apps for fintech is not an easy task. As the purpose of the app is engaged with finance, it will have many critical aspects that need sharp attention. It is important to be attentive and be very sure of every action in every stage of the development process.
Essential steps to building a fintech app:
Analysis
Analysis is the pillar of fintech application development. Do not blindly start developing. Before you begin, invest enough time in analysis. Define your niche, your purpose, product, etc. Knowing everything beforehand is very helpful for a successful fintech app. You must know in advance about compliances and security codes to handle data in a secure environment. The better the analysis, the smoother the development process will be with no blockage in the later stages.
Requirement specification
Your requirement specification will describe the technology and software you will use to develop the app. It will help clarify your vision and give you a picture of your requirements that will be implemented flawlessly with the chosen technology or software. Moreover, it also involves describing all the features and functions of the application. Keeping a checklist of must-have features and functions will help you write code systematically.
Design
Seamless and engaging design is essential for every application. Design is the part of the app the user will notice first; hence, make sure the app design is attractive and easy to use. For a good design, the app's functionality should be easy to use; don't crowd the app with unnecessary features or functions. Users should not have a hard time finding what they are looking for and choose the colors wisely.
Development
The development phase will include writing code for the backend, API, functions, and every other aspect. Development is a critical step in the process and requires the utmost attention, and it is a good idea to know the estimated time required for development well in advance. The development will be done in the technology and language decided in an earlier stage.
Testing and integration
Testing is vital for a secure fintech application. You will be able to find bugs and errors in the testing phase. This step will make sure that customers receive a flawless app. Fintech is an app for finance; hence, a small error can drastically affect everyone. Check if the application is running smoothly on all devices and if the data fetched, entered, and stored is secure or not.
Implementation/ deployment
When the application is developed and free of bugs, then it can be pushed to the final software release process. Deployment is the step where the fintech app will be released in an environment where customers can see and use it.
Each phase of app development is crucial to developing a secure and successful fintech app. Any missed or carelessly performed stage can lead to the partial or complete collapse of your project. That's why applying such approaches as mobile app security best practices are important.
Ensure you can grab consumers’ attention in the market by developing a fintech app with the features below.
Key Features of Fintech Apps
No matter what the ultimate goal of a fintech app is, it must have some essential features for a successful application.
Sign Up and Profile Setup
Payments
Branches and ATM Map
Push Notifications
Onboarding Screen and KYC
History of Transactions
Support Page
The features of the app will mostly depend upon the purpose and domain of the financial institution. Before you evaluate features, you might wonder how much a fintech app costs.
How Much Does It Cost to Build a Fintech App
The development cost of fintech widely depends on the purpose, features, complexity, and a number of other factors incorporated in the app. Also, the total budget of the app differs from country to country. In general, the cost to develop an app is around $100,000 - $200,000.
The development of fintech technology determines the shape of the fintech industry. Here are the top trends that will form the industry.
Fintech Trends for 2023
Fintech’s scope kept broadening beyond its definition in the early years. Here are a few trends that will reshape the future of the fintech world in 2023:
Artificial intelligence
With the global fintech market reaching $190 billion by 2026, AI-based virtual assistants and chatbots will offer advanced financial advice to customers.
Virtual data room
Providing access to the diligence material in a company's electronic virtual meeting room will promote a new digital environment and make transactions seamless.
Blockchain technology
Blockchain technology's new advancements will make data security and risk management easier and error-free.
Mobile apps
Lending, trading, or fintech app, building a banking app has become one of the most profit-making decisions for banking and non-banking firms. Mobile apps will remain a great aid to fintech companies in 2023. They provide clients with advantages of custom software.
These fintech and digital banking trends are the engines that will drive growth for businesses and provide them with a competitive edge in a volatile market. With financial technology expanding its perimeter through advanced technologies, the future of fintech looks nothing less than bright, especially when considering green fintech.
Future of Fintech
With limitless possibilities and growth prospects, the fintech market has a bright future ahead. Top fintech startups and pioneers are continuously working on bringing a new financial order to the world. With fintech going through a major transformation, here are the trends that will rule this domain in the coming times:
Fintech-as-a-Service (FaaS)
FaaS is an adaptation every financial and non-financial company needs to make their solutions more efficient and consumer-friendly. FaaS provides the required technical boost to multiple segments such as lending, credit, and payments. The pace at which various companies choose digital models for lending, wealth management, compliance, and risk management will only intensify in the near future.
Embedded Fintech and Banking as a Solution (BaaS)
An underrated but highly recommended add-on to your business, embedded finance is a must-have to streamline your payment and lending system. Embedded finance is a great way to enhance user experience. Customers tend to focus more on the product or service when there is an embedded finance or loan option without worrying about how to pay for the product. It leads to an exceptional conversion rate and customer satisfaction.
Sustainable Fintech
Sustainable fintech creates, values, and utilizes financial assets in an environmentally sustainable way to support the economy. Fintech policy formulations will head towards establishing a low-carbon world. The industry will emphasize financial inclusion, sustainable consumer behavior, and lower delivery costs.
Digital Banking
Digitalization in the banking sector is a result of technological disruption. The old processes and systems are no longer useful and customer-friendly. There will be more fintech-banking tie-ups to upgrade the banking infrastructure. Cyber risk and financial crime, data integrity and analytics, and enterprise agility are some trends that will change the banking landscape.
There are endless possibilities in fintech for businesses and those who want to make a career in it. Such vast scope and soaring demand for fintech professionals have opened numerous opportunities. Take a look at fintech roles that promise good fortune.
Top Careers in Fintech
Careers related to the fintech domain are in great demand. Here are some of the most exciting fintech career path options with great growth prospects:
Financial Analyst
Financial analysts study data to extract trends and insights that prove crucial for investment decision-making. They work closely with the accounting team to perform variance analysis and create forecasts.
Information Security Analyst
The prime task of information security analysts is to monitor the organization's networks to spot breaches and investigate security threats. They use and maintain firewall and data encryption programs to secure sensitive information.
Blockchain Engineers
Blockchain engineers are instrumental in helping companies transition their platforms to newer technologies. They develop and optimize blockchain protocols, manage frontend and backend development, and centralize/decentralize data.
Once you figure out your line of interest, the next step is learning the skills and knowledge to get your desired role at your desired terms.
How to Learn Fintech
Fintech is a growing domain opening massive job opportunities for those who have the required knowledge and fintech skills. That’s why it is important to gain in-depth exposure and experience in this discipline, for example, you can start with learning fintech statistics 2021. If you are ready, the following is a table of skills required to achieve your goal:
Soft Skills
- Multitasking
- Communication
- Business management
Hard Skills
- Programming skills
- Working knowledge of cybersecurity
- AI/ML and data science
- Understanding of finance
- Blockchain savviness
- Knowledge of mathematics and statistics
Things to Look for in a Fintech Course
While enrolling in a fintech course or certification, consider the following points to make a wise decision:
Select the course that fits your specific requirement
Fintech is a broad domain with a multitude of subdomains. Go for a course that suits your learning goals and aspirations suitably.
Consider courses that help you in personal branding
You simply cannot miss personal branding. Choose fintech courses that offer great career progression and development.
Enroll in courses that offer real-world expertise
Employers prioritize candidates who have real-world experience and expertise to solve real-world problems. Keep that in mind while choosing a fintech course.
Best Fintech Courses/Certification
Acquiring the right skill set and knowledge is paramount for making a great career in the fintech domain. That’s why it is important to pursue a course or certification that can be a stepping stone for your career.
Fintech certification from Harvard
This is an executive-level course designed for senior-level bankers, managers, and finance professionals. The certification offers a great networking opportunity along with detailed knowledge about fintech. The duration is six weeks, and it is a fully online program.
Fintech: innovation and transformation in financial services from the National University of Singapore
This two-month program is designed for mid to senior-level executives to train them to apply fintech innovations to real-world business applications. The course covers fintech drivers such as blockchain, IoT, and cloud computing.
Fintech: foundations and applications from Wharton
Open for learners at all skill levels, the course provides fundamental building blocks and real-world fintech expertise. This is a high-rated course and can add great value to your resume. The duration of the course is 15-20 hours. The learning mode is online.
Professional certificate in fintech: the future of fintech from the University of Texas at Austin
This advanced-level course helps top-level business leaders, executives, and bankers bridge the gap between fintech advancements and actual work. The course is fully online and demands 80-100 hours.
Fintech and the future of finance: blockchain, cryptocurrencies, govcoins, and the payments revolution from the Economist.
As the name suggests, the course provides a detailed overview of leading fintech technologies. The course benefits policymakers, regulators, and other executive-level managers. The mode of learning is online, and the course duration is six weeks.
Conclusion
Now you have a fair overview of what fintech is and how it can be pivotal for the world economy. It has the power and caliber to change the financial landscape and empower businesses to make their financial services more consumer-friendly. These business opportunities bring great job prospects for those who wish to explore careers in this vast field.
If you are an entrepreneur thinking of exploring the fintech domain, know how it can benefit your business and take it to new heights. For existing businesses, it can be a rewarding breakthrough. If you're looking for a fintech solution for a website, mobile app, or software, our highly professional Geniusee team is here to assist you. Get in touch today to learn more.
