![\"The](\"https:\/\/ieeecs-media.computer.org\/wp-media\/2022\/12\/05205752\/The-evolution-of-FinTech.jpg\")
Financial technology, more commonly known as \u201cFinTech,\u201d is an umbrella term to represent all the technologies utilized to digitize and streamline conventional financial services, including but not limited to banking and payment methods. FinTech may refer to financial-related applications, software, programs, or algorithms deployed on desktop computers or mobile devices. Specific hardware, for example, internet-enabled piggy banks and ATMs, are regarded as FinTech. When people open an app on their smartphone to check bank account balances and pay for online purchases, they use FinTech.<\/p>\n
Many modern businesses and eCommerce companies rely on FinTech to handle transactions, process payments, and complete a wide range of accounting tasks. Most FinTech platforms can control typical banking activities such as transferring money between accounts, making deposits, applying for loans, and paying bills. Some venues have powerful software and hardware configurations to manage crypto exchanges and peer-to-peer lending. Financial services use FinTech to carry out a variety of backend operations like account monitoring and underwriting loan applications.<\/p>\n
\u00a0<\/p>\n
The Evolution of FinTech<\/h2>\n
\n
Just because the term \u201cFinTech\u201d sounds like a recent development, it doesn\u2019t necessarily mean the concept is also new. According to Merriam-Webster Dictionary, the first known use of the term was in 1971. Two years earlier, the United States saw its first ATM opens for business in Rockville Center, New York. Back in the day, ATM was considered a state-of-the-art FinTech platform, although by then, the term had been coined yet. During the early 1990s, the development of a centralized signature verification for checks \u2013 another example of early FinTech \u2013 began.<\/p>\n
The technologies continue to develop over the decades. Starting with ATM, the following prominent manifestation of FinTech was the introduction of NASDAQ in 1971, followed by the advent of full-scale online banking in the early 1980s. By the dawn of the new millennium, eight banks in the United States had more than a million online customers combined. It might sound like a small number now, but it was a considerable FinTech adoption in 2001.<\/p>\n
![\"\"](\"https:\/\/ieeecs-media.computer.org\/wp-media\/2022\/12\/05205957\/Technologies-in-FinTech-300x92.jpg\")
<\/p>\n
In 2014, Jamie Dimon \u2013 CEO of JP Morgan \u2013 said in an annual letter to shareholders that hundreds of startups were very good at reducing lending \u201cpain points\u201d because they could underwrite loans in minutes instead of weeks. The CEO realized that those startups were becoming competitors to the company\u2019s services. It would take JP Morgan five more years to make a notable $25 million investment in Fintech startups. Goldman Sachs was ahead when they launched an online bank called Marcus three years earlier.<\/p>\n
The moves from JP Morgan and Goldman Sachs are testaments to how disruptive FinTech is to conventional banking services. Existing financial firms either provide millions in venture funding for startups or create their FinTech ventures to stay competitive. Online banking, a combination of traditional and tech-enabled financial services, has become commonplace. It is a phenomenon seen not only in developed nations but anywhere worldwide.<\/p>\n
\u00a0<\/p>\n
\n
\u00a0<\/p>\n
Want More Tech News? Subscribe to ComputingEdge<\/i> Newsletter Today!<\/strong><\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n In 2021, there were some 26,000 FinTech startups worldwide. Nearly half of them are based in the United States. Not only does the country have the largest concentration of new FinTech companies, but it also leads in the number of startups-turned-unicorns. By late 2021, the United States gave birth to 81 FinTech unicorns located prominently in New York and California. In comparison, in the second place, China only counted 11 of them, followed closely by the UK with ten unicorns.<\/p>\n The American region has been at the global forefront of the transformation, with as many as 10,755 FinTech startups. With 9,233 such startups, the EMEA (Europe, the Middle East, and Africa) region sat directly below. Taking third place was the Asia Pacific region, with 6,268 startups.<\/p>\n Although the UK didn\u2019t shine in quantity, the country remains the next best hub \u2013 second only to the US. London is the undisputed FinTech leader of all European cities, mainly thanks to its superiority in personal finance and blockchain services. The UK has only seen fewer than a dozen unicorns, but it has more than 20 reputable powerful accelerators, including Barclays, BBVA, and Anthemis. Furthermore, comprehensive FinTech regulations and recent tax deductions make the country even more interesting for startups than before.<\/p>\n Industry sectors in which FinTech is most active are as follows:<\/p>\n FinTech has four major groups of users: B2B for banks, customers\/clients of those banks, small businesses, and consumers. The proliferation of smartphone technology (and, by extension, mobile banking) is expected to bring about intensified and streamlined interactions among all four groups.<\/p>\n \u00a0<\/p>\n The traditional banking or financial system is often considered slow and complex. FinTech focuses on merging the design with an intuitive digital interface. Thus far, the undertaking has worked well. In the first quarter of 2022, FinTech startups processed a global financial transaction worth $32.4 billion \u2013 a whopping 27% increase from 2021. In Europe, investment in FinTech also saw a rise of 9% during the same period.<\/p>\n Despite the recent recession, there isn\u2019t an immediate threat to the growth of FinTech worldwide. The pandemic and recession-related investment risks have skyrocketed the use of FinTech, precisely the demand for entirely digitized financial services. While the recession triggers a general economic slowdown, Fintech remains a priority for investors in the foreseeable future due to its future-proof system and invulnerability to real-world lockdown. Investors are likely to take fewer risks during the recession. Still, even in the long-game approaches, FinTech\u2019s great potential to be an integral part of the finance industry holds a promise of almost certain ROI.<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n Sreekanth\u2019s passion is to explore and leverage FinTech and Digital Technologies \u2013 Artificial Intelligence, Blockchain, Data Analytics, IoT, etc. in Agriculture to build robust and large-scale Agri-Technology products to de-risking agriculture for Farmers. He currently lives in the United States for the last 10+ years and works for a large FinTech\/Payments company in the World.<\/p>\n Disclaimer:<\/strong> The author is completely responsible for the content of this article. The opinions expressed are their own and do not represent IEEE\u2019s position nor that of the Computer Society nor its Leadership.<\/p>\n<\/div><\/div>\n
\nCurrent State of FinTech<\/h2>\n
\n\n
FinTech Against Recession<\/h2>\n
\nReferences<\/h2>\n
\nAbout the Writer<\/h2>\n
\n![\"Sreekanth](\"https:\/\/ieeecs-media.computer.org\/wp-media\/2022\/11\/23162342\/Sreekanth-150x150-1.png\")
Business Technology Leader with 15 plus years of experience in Digital Transformation, Designing Enterprise Business applications to support Commercial and Corporate operations through driving process optimization and system enhancements that fully leverage the power of ERP applications and enable them with improved reporting capabilities.<\/p>\n