Photo: Priyanka Parashar/Mint
Photo: Priyanka Parashar/Mint

Term of the day: What is fintech?

Fintech services mainly use the internet and technologies like cloud computing, data analytics, machine learning and artificial intelligence

Fintech or financial technology is a term used for companies or services that work towards making all types of financial transactions simpler through the intervention of technology.

Fintech services mainly use the internet and technologies like cloud computing, data analytics, machine learning and artificial intelligence. For the consumer, fintech services are delivered through internet-enabled devices, including smartphones.

Online payments, which have moved from a multi-step and cost-intensive process to a simple one-step process, that too at negligible cost, are just one example of how fintech has simplified processes. Another example is in the insurance sector. With companies—InsurTech—comparing the prices and features of insurance policies, making an informed decision is now possible.

Lending too has seen significant changes, with fintech companies, in collaboration with banks or non-banking financial companies, making services like payday loans or instant loans for consumer durables possible.

Credit scores and measuring credit risk is another emerging area for fintech companies. Though still in nascent stages, this could significantly improve the availability of credit to a large number of people.

Funding by venture capitalists to fintech businesses was highest globally in 2015 at $14.6 billion, according to a PwC report from 2017. In India too, the funding was the highest in 2015.

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