Fintech: What It Is and What It Means for Us
By Rachel Seitz
One word you may hear thrown around a lot, often with reference to Climb Credit, is "fintech." But whether you’ve heard of it or not, it’s a term which has had a large impact over all our lives in the 21st Century. To help you better understand this emerging market, our blog post this week is dedicated to helping explain what fintech is and what it means for all of us.
First off, what is fintech?
It’s a combination of “financial” and “technology,” and as you may guess from those two words, it refers to services that merge technology and finance. To get even more specific, Oxford Dictionaries defines it as “Computer programs and other technology used to support or enable banking and financial services.” If you think that seems pretty nebulous, well, you’d be exactly right—not even its capitalization is agreed upon by everyone. (A quick Google search will turn up alternations between “fintech,” “Fintech,” “FinTech.”) The term originally just referred to computer technology used for non-client–facing offices of banks and trading firms, but in recent years it’s expanded to include a wide range of technological advances in the financial sector.
What are some examples of fintech companies?
Well, for one, Climb Credit. We use technology both for calculations and analytics, like determining the return on investment for certain educational courses, and to streamline the student loan process; our entire application process can be done on your computer or phone, even down to e-signing documents on your online Climb account. Other companies and tools commonly referred to when discussing fintech are Bitcoin, the digital currency; mobile banking; digital wallets like those from Apple and Google; Venmo, which allows users to transfer money between their bank accounts and their friends’ via their phones; crowdfunding campaigns; and a variety of budgeting apps to make it easier to keep track of your money anywhere. And that’s just a snapshot of what’s included in the world of fintech.
So what does this mean for us?
Things will become faster and simpler. Processes, like a Climb loan application, are becoming paperless and more efficient. New technologies are taking the guesswork out of financial decisions, even learning the financial habits of users; a whole plethora of information can be learned, gathered, and analyzed. This is then a two-way street; companies and consumers now have greater access to each other, and more data is accessible from both parties than ever before. Of course, this is a market that’s both quickly growing—it saw an investment increase of $11.07 billion worldwide from 2008 to 2015—and quickly changing. New services and advancements are being created and added to the definition of fintech, so we’ll get to see where it goes next!