Digital Trend Alert

 

Fintech

Fintech: the meshing of finance and technology

Carol Ingley, President, Media Mogul Enterprises

Week of August 1, 2022, through Week of September 12, 2022

Digital Trends and Key Words:  fintech market, fintech services, fintech companies, size of fintech market, payments, banking and mobile banking, investing & wealth, Chime, Square, Venmo, Paypal, Stripe

     Innovative, disruptive, explosive. What is fintech? It’s technology that delivers financial services through software. Financial become fin, technology becomes tech and from that, a whole new marketplace has emerged. It’s everywhere.

    Simply put, fintech companies mesh finance and technology to create financial services. These companies see themselves as rivals to traditional banking and financial services.

     Innovative, disruptive, explosive: these are all adjectives to describe the fintech marketplace. Yet the term is still not widely used outside of certain finance and technology circles. The focus here of this fast-changing and fast-growing market is on size of the fintech market, types of fintech and examples of fintech companies.

     Size of Fintech Market Will Triple over Seven Years. The already fast-growing fintech market really took off in 2021. That’s when venture capitalists doubled their investment in fintech companies.

     In terms of sheer size, the global fintech market is estimated to have ended 2021 at around $112.5 billion. It will triple by 2028 to $332.5 billion, according to a report by Vantage Market Research. That’s really big growth. Traditional banking has been embracing fintech as well, but not nearly as fast or as innovative as many fintech firms. No one really knows how the traditional banking industry will shake out because of this trend, but they, too, are moving aggressively.

     Types of Fintech. Four key types of fintech are: banking and mobile banking, payments, investing & wealth, and markets, currency & exchange. These are discussed in the following sections.

     Banking and Mobile Banking. Traditional banking has embraced fintech via mobile banking. You can do a lot of banking with banking apps. Sometimes traditional banks are partnering with fintech companies but, in general, traditional banking has lagged behind the innovation of the fintech marketplace.

     Because they are not nimble like fintech companies, traditional banking services see fintech as major competitors.

     So what specific companies have walked into the traditional banking space? Chime is one example.

     Chime is a middleman between you and a traditional bank. Said another way, Chime packages features that add value to traditional banking services and--behind-the-scenes where the consumer doesn’t see--the traditional bank does the heavy lifting.

     Chime offers one checking account, one savings account and a secured credit card. An attractive user interface allows consumers the ability to open these fee-free accounts. Additional features for the accounts  can be accessed as part of the app. These include automated savings tools, ability to receive direct deposits up to two days early, as well as the ability to use more than 60,000 ATMs.

     The downside is that Chime is not a bank. No in-person services, then, are available.

     Other banking and mobile banking apps include Starling Bank, MX,  Venmo and Revolut.

     Payments. Square is a mobile payment company that offers a suite of business software, point-of-sale (POS) systems, payment hardware products, and small business services. Unlike most payment processors, Square is available to businesses of all sizes and offers the most comprehensive free POS system on the market.

     Venmo allows you to pay and request money from your friends. At its core, Venmo provides a social way to pay your friends when you owe them money and don't want to deal with cash. For example: 1) Splitting a lunch bill; 2) Paying your friend half of a cab fare; or 3) Sending your roommate your half of the rent.

     Venmo also has banking services such as  Venmo Mastercard Debit Card  that can be used anywhere in the U.S. where Mastercard is accepted

     Paypal and Stripe are two other examples of fintech as payments.

    Investing and Wealth Management. Investing and Wealth Management is another type of fintech. Robin Hood and Mint are two examples.

     Robin Hood is a fintech company that operates an online discount brokerage offering commission-free trading.

     Mint, formerly known as Mint.com, is a personal financial management website and mobile app for the US and Canada produced by Intuit, Inc. (TurboTax, QuickBooks, and other products). Mint gives you online access to its products.

     Market, Currency and Exchange. Coinbase is the biggest cryptocurrency exchange in the U.S. Cryptocurrency has been nicknamed digital gold, risky but potentially very valuable. Coinbase has evolved since it was founded in 2012 as the primary place to purchase these blockchain tokens.

     What is a cryptocurency exchange? It is where customers  go to trade cryptocurrencies or digital currencies for money or other assets.

     Another player in this market is Ethereum, a decentralized, open-source blockchain. It also offers smart contract functionality.

     Summary. Fintech is a big growth market over the next seven years and is widely diverse. It is an area to watch carefully, particularly how traditional banking adapts to this fast-moving market arena.

        

     Carol Ingley is a marketing and finance consultant as well as a futurist and technologist. She is president of Media Mogul Enterprises.

 

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