Surely you have already heard the word "fintech", because everyone has already heard it. But very few people really understand its meaning. However as we say: "Very few people know it," several people in the world manage to figure out this phenomenon, because it changes our habits, way of life and the idea of comfort and very soon it will change it all even more. We also want to be among those who figured it out, - so join us!

Financial technologies

We have long been using what is called financial technologies, or shortly, FinTech.

Every time you pay taxes through the online office, go to an online bank or buy music in iTunes - you use the achievements of the FinTech industry.

It is because of the extensive use of technology in the field of finance that it is difficult to explain exactly how FinTech works, but we'll figure it out!

FinTech и область применения

Let’s start with FinTech in business. Over the past year FinTech companies in the US only have made $ 17.4 billion, and the global share of profits was $ 84 billion. Not bad, right?

Of course, it is worth taking into account that now we are talking only about startups. If you add the companies differently associated with government agencies to the list, this amount will be even greater. So, what do these companies do?

  • Cryptocurrencies and digital currencies.
  • The technologies of blockchain, with a decentralized system.
  • So called «smart contracts», which allow you to safely exchange money and data without the help of third parties.
  • InsurTech — technologies that are used in the insurance industry to optimize the processes.
  • RegTec (regulatory technology) — technologies that ensure fast and reliable compliance with the legislation. Now their popularity is growing, as in many countries legislation is being actively introduced in relation to FinTech companies, which have to be monitored to ensure their legal activities.
  • Robo Helpers — software algorithms that include different types of investment advice for much less money than real consulting firms.
  • Non-banking services that offer services to low-income people who can not, for one reason or another, receive support from traditional banks or other financial companies.
  • Cybersecurity.

FinTech and banks

Along with the popularity of the Internet increases the frequency of online transactions, including financial ones. Now it's much more convenient to transfer money to relatives from your smartphone than sitting in a bank or even standing at an ATM. The younger generation is completely immersed in online operations. Banks traditionally can not afford to change the principles of operation quickly and drastically, but financial heavyweights try to keep pace with the times, because they face their new competitors every day.

According to the Global Report 2017 more than 80% of the world's banks lose their revenues because of the growth of the functionality of FinTech-companies. First of all, customers use online payments, transfers to accounts and storage of personal finances. More than 80% of the banks surveyed intend to establish cooperation with FinTech companies in order to somehow cover the damage.

Experts of the famous analytical company PwC (PricewaterhouseCoopers) believe that soon FinTech-companies will take over even the personal funds management. In this case, users can ask themselves whether they need a bank account at all.

However, FinTech still has a lot of open questions. One of the most acute is the low confidence of potential customers.

Studies show that about 50% of customers still prefer traditional banking services, albeit use them through mobile applications.

An interesting FinTech-hybrid, which could appear only today, are the neo-banks created by existing banks. Such companies began to gain popularity after the global banking crisis in 2008.

What is neo-banks? As a rule, these are companies that exist exclusively online, i.e. do not have physical branches. Their advanced technological system is built from scratch, without the use of ready-made online designers. Of course, such companies are more mobile than conventional banks, because they are not tied to one particular place, and the class of service in them is much higher than the traditional one for online banking. Nevertheless, in order to obtain a license easier, neo-banks are often created on the basis of already existing banks.

FinTech and the future

Modern technologies have an amazing potential, which can be realized in completely unexpected areas. Therefore, it is now difficult to say exactly what FinTech will be in the future, but it will undoubtedly continue to gain popularity among businessmen and among potential customers. And experts are now ready to evaluate some of FinTech's new directions, which are yet to appear.

Professor of Warwick Business School Marcos Zahariadis believes that FinTech-companies will work closely with banks and, possibly, will try to reform the banking system as it is (

This may seem strange, but centralized governments are very interested in using such decentralized FinTech products like blockchain. The potential of its application in state structures is unlimited. It could significantly simplify the operation of databases, simplify financial transactions related to taxes, and exchange data between healthcare institutions.

Below is the statistics of investment in blockchain among pioneering countries, such as United Kingdom, the United States and China, compared with investments in blockchain of other countries.

Jim Rogers, one of the founders of the Quantum Fund, even promises that all countries will issue their own cryptocurrency in the future.

Инвестиции правительственных лидеров в блокчейн

One of the most logical areas of development of FinTech is mobile banking. Most rapidly it develops in those countries that are not included in the world banking system.

According to the statistics of the financial edition of Raconteur, in South Asia, 32% of the solvent population do not have access to the banking system at all.

Modern FinTech-companies help solve territorial problems in countries with a low level of access to banking services, greatly simplify the use of bank system and provide residents with new opportunities.

Invesrtments of government leaders in blockchain

All these are only the most obvious possibilities of FinTech application in the future, but we can say it: the global approach to finance is completely changing. Popularity in this area is provided by the growing needs of the new time, which means that FinTech will remain one of the fastest growing sectors of the world economy until these needs will be fully satisfied.