Financial technology (fintech) is a broad term that describes many types of financial technology. Fintech can mean different things to different people, making it difficult for those who are inexperienced to fully comprehend it.
Essentially, fintech is anything that uses the Internet to facilitate or lead to a financial transaction. These categories below fall under fintech’s umbrella.
Digital Banks
Banking transactions are no longer limited to brick-and-mortar banks. The traditional banks are feeling the pressure as more and more digital banks (that exist solely online) allow users to open online accounts and provide assistance with withdrawals, deposits, and transfers.
Payments
Purchasing goods and services from another company or individual is now easier than ever. Payments can be made without using a traditional bank and without incurring high fees.
International money transfers, for example, are traditionally expensive payments. Money transfer companies and banks may charge fees of up to 8 per cent, but fintech companies charge far less.
Blockchain Technology & Cryptocurrencies
Fintech has been the most prominent application of blockchain technology so far, but it has the potential to revolutionize a wide range of business sectors. This technology enables individuals to maintain a public ledger of their online transactions. There are multiple areas on a network where this information can be shared and cannot be deleted.
Blockchain serves as the foundation for cryptocurrencies. Cryptocurrencies use encryption to regulate the production of currency units and to authenticate the transfer of funds.
Enterprise Software & Tools
There are two primary branches of fintech when considering this type:
- SaaS (Software as a Service)
- POS (Point of Sale)
Cloud-based services can be accessed from anywhere at any time. Real-time monitoring of store activity and metrics is possible through POS systems, which facilitate transactions.
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