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A Look at the Evolution of Fintech

A Look at the Evolution of Fintech

The evolution of fintech has steadily changed the way that individuals handle their finances. People are more technologically savvy than ever before, due in part to the rise in technology. Even small children have grown more comfortable in working with Alexa or Google Assistant. As millennials and other younger generations grow up and begin to enter the financial sector in droves, they will have an expectation of the same accessibility and efficiency in their financial products that they have experienced throughout much of their daily lives. The demand for better technology in connection with banking and financial institutions has continued to grow. We will take a look at the emergence of fintech, how it has changed in recent years, and what we have to look forward to in the future.

What Exactly Is Fintech?


In its simplest form, fintech or financial technology refers to any type of new technology that is specifically designed to help automate or improve the delivery of financial services. Fintech aims to help individuals and companies to manage their financial processes or operations through software and algorithms used by computers or smartphones. In the early days of this developing industry, financial technology primarily applied to the back-end systems found in banks and other financial institutions. However, as fintech has grown and expectations have changed, the definition has shifted.

Consumer-Oriented Fintech

Nowadays, fintech aimed at consumers has become an important part of the industry. You most likely use fintech in your everyday life. Technology such as banking apps, mobile payment apps (think PayPal or Venmo), and even cryptocurrency are part of the fintech industry. Remember the rise of Bitcoin and other cryptocurrencies? That is an example of fintech. These accessible, consumer-oriented types of financial technology are designed to be user-friendly, modern, and innovative. Such technology offers consumers greater autonomy in regard to their finances, enabling them to make decisions more easily without the need to visit a bank or investment firm. If you’re picturing applications such as Tally, Acorns, or Mint, you’re on the right track in regards to what consumer-oriented fintech looks like.

Other Types of Fintech

fintech user

Admittedly, a large portion of fintech startups and older companies are aimed more at business-to-business transactions, larger companies, or financial professionals and investors. These types of businesses can be harder for a layman to understand at first glance, but the services they provide are essential to the financial industry. Many of these business-to-business companies provide services that include streamlining the payroll process, improving the ability of small businesses to bid for company or government agency contracts, and helping businesses to automate processes like compliancy reporting, benefits, and payroll. Others focus on helping businesses to use software to provide better data security, which is an increasing problem as fintech becomes more widespread and makes financial services easier to access.

Most Innovative and Active Areas of Fintech

As the fintech industry develops and changes, new areas are growing more innovative. Fintech now encompasses everything from mobile banking and investing to crowdsourcing platforms and budgeting apps. Many of the most innovative areas center around consumers and their interactions with financial technology on the go, particularly mobile phones. Cryptocurrency and digital cash are experiencing greater change and innovation. New cryptocurrencies are still emerging, and related blockchain technologies such as Ethereum are also entering the public eye.

Also on the rise is the concept of open banking, which is related to blockchain technology. Open banking holds that third parties should be able to access bank data in order to create applications designed to connect them with financial institutions. One example of an app that combines all of your finances in one place in this way is the budgeting and finance management app Mint. Robot advisors are also emerging. Some can help you to manage your debt or finances (like what Tally uses), and others can help you with investing (like Betterment) by using algorithms to provide advice.

Given the decentralization of how data is stored by many fintech companies and technologies, it’s no surprise that one of the more innovative and active areas of fintech is cybersecurity.

These are just a few examples of the ways that fintech has changed and expanded over the last several years. There are numerous startups, with more emerging every day, backed by funding topping more than $12.4 billion in 2018, a 43% increase from 2017. In the future, you can expect to see more changes as the fintech landscape continues to evolve.