How Financial Technology Is Transforming Financial Services

As a field, financial technology (fintech) is relatively young, but it’s booming. This is partly because of the rapid adoption of mobile technologies and a general trend toward digitization in our lives. But it’s also because of the many ways fintech can improve existing products and processes. It’s used for everything from reducing fraud to streamlining accounting and customer-facing activities like personal banking, mortgages and business loans.

In the past, fintech has been focused on behind-the-scenes systems at banks and other institutions; however, it’s now increasingly transforming consumer-oriented services and even entire industries such as e-commerce, real estate, lending and fundraising. The most obvious example of this is the rise of “neo-banks,” which offer digital versions of traditional bank services without physical branches. These are popular among younger, tech-savvy consumers who prefer the convenience of online and mobile banking.

Other examples include digital currency exchanges, robo-advisors that provide investment advice and savings tools with little to no human interaction and cryptocurrencies that allow users to trade, hold and use non-fungible tokens (NFTs). These developments are often fueled by blockchain, a platform that compresses the asset transfer process into one step and reduces fees.

Traditional financial service providers have responded to this change by either developing their own fintech solutions or partnering with established companies. Moreover, they’ve become receptive to the concept of financial inclusion—making it easier for people in underserved areas to access banking, credit and other financial services.

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