What Is Fintech?

When people think of fintech, they might picture cutting-edge technology like blockchain or algorithmic trading. But the term really covers a wide range of much more mundane, but no less important, applications. Fintech combines new technologies with traditional finance functions to create innovative and user-friendly solutions for consumers and businesses alike.

Some examples of fintech include peer-to-peer (P2P) lending platforms that allow individuals to fund each other’s loans; cryptocurrency apps that let users buy, sell and trade cryptocurrencies and digital tokens like Bitcoin and non-fungible tokens (NFT); and robo advisors that use artificial intelligence to manage investment portfolios for customers. There are also a host of other financial services companies that use fintech to provide better or more efficient services, including online discount brokers, remittances companies and banks that operate over mobile networks instead of in brick-and-mortar locations.

In addition to providing more convenient consumer services, fintech can help reduce costs for financial services providers. Online discount brokers, for instance, have forced traditional brokerage firms to cut their fees. Remittance companies have also helped lower the cost of international money transfers. And banking as a service platforms—which allow third-party developers to build fintech products on top of existing bank infrastructure—have made it easier for banks to create “neo-banks” that offer more innovative customer experiences.

As the pace of fintech innovation continues to accelerate, countries need to ensure that their regulatory frameworks keep up with it and that they have the right policies in place to encourage growth while protecting consumers and the integrity of domestic monetary systems. In this context, the World Bank and IMF are working to support countries in strengthening the effectiveness of their policies by promoting a broad and balanced approach that addresses the needs of all stakeholders. https://greyjournal.net/hustle/work-tech/navigating-the-new-challenges-for-fintech-startups-in-a-changing-economic-landscape/

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