Some well-known companies such as Personal Capital, Lending Club, Kabbage and Wealthfront are examples of FinTech companies that have emerged in the past decade, providing new twists on financial concepts and allowing consumers to have more influence on their financial outcomes.
Digital Lending and Credit
FinTech giant Kabbage directly funds small business loans and is powered by transactional data to help make incredibly quick lending decisions. Tapping into peer-to-peer lending, Lending Club lets users loan each other money (P2P lending) for business ventures without the involvement from a traditional financial institution. Each of these innovations is made possible through the use of Big Data and advanced analytics across digital platforms.
In the growing field of credit reporting, Credit Karma is an example of a FinTech that’s providing a service (free credit reports) in exchange for the ability to advertise loans and credit cards tailored to the specific needs of its customers.
With consumers looking more towards financial wellness, many financial institutions are adopting or expanding their mobile banking capabilities with the rising demand for digital banking among consumers. Most banks now offer some type of mobile banking capability on their platform.
Ask any person under 30 how they prefer to pay and they’ll likely tell you mobile apps are the way to go. As we’ve moved from a cash-based society to an increasingly digital one, peer-to-peer services such as Venmo have arisen to replace traditional payment methods. In fact, it’s estimated that in 2018 alone, mobile point of sale transactions will top $5.4 billion worldwide.
Cryptocurrency & Blockchain
Cryptocurrency exchanges have been able to connect users buying or selling cryptocurrencies such as bitcoin. Blockchain solutions have aimed to reduce fraud by keeping provenance data on the blockchain.
Insurtech is the use of technology designed to maximize savings and gain efficiency from the insurance industry models. Insurtechs are redefining the insurance customer experience by innovating lengthy processes including underwriting, claims processing and immediate activation. FinTech companies are starting to partner with traditional insurance companies to automate processes and enable the insurance companies to expand coverage.
Trading and investing has improved with the adoption of FinTech. Information from big data is often unstructured and unreadable without the help of AI technologies. Using natural language processing, these technologies can sift through complex datasets and extract insights from data in a matter of seconds. Now, traders can now run large amounts of data through algorithms and identify trends and risks.