What Is FinTech? How Did It Evolve?

From purchasing a cup of coffee at your local coffee shop to managing your finances, Fintech is all around us in 2019; think apps like PayPal, Apple Pay, Google Wallet or simply your credit card to make an online purchase.

In broad terms, FinTech (short for Financial Technology) is when technology is applied in financial services or used to help companies manage the financial aspects of their business - this includes new software and applications, processes and business models.

Just a few years back, homebuyers, entrepreneurs and investors had to approach the bank to apply for a mortgage, a small-business credit line or brokerage account. Now, with the evolution of financial technology, all that has become easier with a mobile device and without having to deal with a traditional bank.

That being said, FinTech is not a new concept. It has been around in one form or another and for as long as financial services have emerged, possibly since computers were first used in Wall Street back in the 1960s. However, ever since the global financial crisis of 2008, FinTech evolved, disrupted and reshaped commerce, payments, investment, asset management, insurance, clearance and settlement of securities and even money itself with cryptocurrencies such as Bitcoin.

It has caught the attention of consumer advocates, regulators, and industry veterans — some welcomed it, while others scoffed at it.

How Is FinTech Disruptive?

Fintech has disturbed just about every corner of the globe financially. Here are some real-life examples:

• Services such as Venmo, a person-to-person money-transfer app owned by PayPal started displacing established bank products. Now big banks are now joining the revolution.
• Dozens have teamed up to offer Zelle, a Venmo-like app.
• Goldman Sachs Group Inc. rolled out Marcus, a mobile-banking app that now claims 1.5 million customers.
• Industry-friendly regulators in the U.S., U.K. and Singapore have set up or proposed so-called sandbox programs to help fintech firms develop new offerings with lighter oversight.
• European Union banks as of 2018 had to give qualified fintech firms access to account data, such as credit-card transactions if bank clients requested it.
• Investors are piling in Adyen NV, a Dutch startup that processes Uber, Netflix and Spotify payments, joined 28 other companies in the pantheon of fintech unicorns.

Perhaps one of the more popular and big innovations in the fintech space has been the development of stock-trading apps. When once investors had to go directly to a stock exchange like the NYSE or Nasdaq, now, investors can buy and sell stocks at the tap of a finger on their mobile device.

Who Uses Fintech Now?

B2B (Business to Business)

Before fintech was developed, businesses would go to banks to obtain loans and financing. But with the advent of fintech, businesses can easily get loans, financing and other financial services through mobile technology.

Additionally, cloud-based platforms and even customer-relationship management services like Salesforce (CRM - Get Report) provide B2B services that allow companies to interact with financial data to help improve their services. 

B2C (Business to Client)

Of course, fintech has many business to client, or B2C, applications. Cash apps like PayPal, Venmo and Apple Pay all allow clients or customers to transfer money via the internet or mobile technology, and budgeting apps like Mint allow customers to manage their finances and expenses. 

What's Happening In The FinTech In 2019?

Well, for starters, one of the biggest M&A deals so far in the year happens to be in fintech. TheStreet reported in January that mega financial technology companies First Data (FDC - Get Report) and Fiserv (FISV - Get Report) will be merging into a combined $22 billion payments company.

But apart from fintech mergers, according to TechCrunch, there are now over 20 fintech "unicorns" - startups worth over $1 billion. These unicorns are led by fintech companies like Stripe, and are projected to continue growing in 2019 - as 2018 financing rounds propelled several more companies into the unicorn space. And, according to a TechCrunch analysis, there are some 40 more fintech companies on the verge of reaching unicorn status, who've all raised some $100 million in equity funding in 2018 - including companies like Stash, Betterment, Wealthfront and Lemonade.  

Additionally, according to some predictions, 2019 will be the year for further development of AI (artificial intelligence) technology on both the consumer and back-end side of fintech. Is your business taking note of this Fintech boom?