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Fintech (financial technology) is used to describe new tech that seeks to improve and automate the delivery and use of financial services. ​​​At its core, fintech is utilised to help companies, business owners and consumers better manage their financial operations, processes, and lives by using specialized software and algorithms on computers and, increasingly, smartphones making it one of the most important and fastest growing markets out there. 

When fintech emerged in the 21st Century, the term was initially applied to the technology employed at the back-end systems of established financial institutions. ​Since then, however, there has been a shift to more consumer-oriented services and therefore a more consumer-oriented definition. Fintech now includes different sectors and industries such as education, retail banking, fundraising and non-profit, and investment management to name a few.

Fintech also includes the development and use of crypto-currencies such as bitcoin. While that segment of fintech may see the most headlines, the big money still lies in the traditional global banking industry and its multi-trillion-dollar market capitalisation.

Broadly, the term “financial technology” can apply to any innovation in how people transact their businesses. Since the internet revolution and the smartphone revolution, however, financial technology has grown explosively, and fintech, which originally referred to computer technology applied to the back office of banks or trading firms, now describes a broad variety of technological interventions into personal and commercial finance.

The most funded fintech start-ups share the same characteristic: they are designed to be a threat to, challenge, and eventually take over traditional financial services providers by being more agile, serving an underserved segment or providing faster and/or better service.

New technologies, like AI (artificial intelligence), predictive behavioural analytics, and data-driven marketing, will take the guesswork and habit out of financial decisions. “Learning” apps will not only learn the habits of users, often hidden to themselves, but will engage users in learning games to make their automatic, unconscious spending and saving decisions better. Fintech is also a keen adaptor of automated customer service technology, utilising chatbots and AI interfaces to assist customers with basic tasks and also keep down staffing costs. Fintech is also being leveraged to fight fraud by leveraging information about payment history to flag transactions that are outside the norm.

Financial services are among the most heavily regulated sectors in the world. Not surprisingly, regulation has emerged as the number one concern among governments as fintech companies take off. As technology is integrated into financial services processes, regulatory problems for such companies have multiplied. In some instances, the problems are a function of technology. In others, they are a reflection of the tech industry’s impatience to disrupt finance.

For example, automation of processes and digitisation of data makes fintech systems vulnerable to attacks from hackers. Recent instances of hacks at credit card companies and banks are illustrations of the ease with which bad actors can gain access to systems and cause irreparable damage. The most important questions for consumers in such cases will pertain to the responsibility for such attacks as well as misuse of personal information and important financial data. Making it that much more important to ensure that the fintech companies you are utilising are accredited by the relevant regulators.

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