Fintech vs Banks: What’s The Difference?

Fintech, colloquially referred to as the future of banking, has arrived. In just a few short years, the industry has grown into one of the most vital sectors of the financial world. With the launch of new products and services, fintech companies have transformed the finance industry, creating innovative experiences for users.

Many of these companies have managed to sustain their growth and have evolved into significant players in the industry, despite their young age.

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Main Differences

  1. FinTechs are disrupting the banking industry. They have become the go-to resource for financial services. They’re becoming so popular that traditional banks are now starting to offer their cryptocurrency wallets. This has created a whole new market for FinTech companies to operate in.
  2. On the other hand, Banks are still trying to figure out how to compete against FinTechs. While many banks are moving towards blockchain technology, others are looking into improving customer service.
  3. Blockchain technology is changing the world we live in today. We can’t say what the future holds for this technology, but we know it’s here to stay. There are already so many opportunities for blockchain technology that no bank will be able to ignore it.
  4. Banks need to start adopting these technologies if they want to survive. FinTechs are not only providing better products, but they’re also making money while doing so.

Read More: Broad Money vs Base Money: What’s the Difference

What is the Fintech?

Fintech is the combination of finance and technology. It is the use of information technology to improve financial services. Fintech has been described as the “financial services industry’s answer to disruptive innovation” (The Economist).

Fintech can describe any company that uses technology to disrupt the traditional banking system. Examples include mobile payment systems like Apple Pay, Square Cash, Venmo, PayPal, etc., online banks like Simple Bank, Zelle, Lending Club, etc., and peer-to-peer lending platforms like Prosper Marketplace, Funding Circle, etc.

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Fintech is an umbrella term for the financial technologies used by consumers and businesses to interact with financial services institutions and financial technology companies. Fintech covers everything from cryptocurrency to payments, peer-to-peer lending, Robo-advisory, Robo-investing, and initial coin offerings (ICOs).

It is the technology that underpins the entire financial system. It includes internet-based inventions like online trading platforms, online banking, internet payments, and electronic money. Fintech is global, growing rapidly in economies around the world, and is a massive driver of international commerce.

Moreover, FinTech is a broad area that refers to technology companies whose core businesses involve offering financial services via the Internet. FinTech is a high-growth industry that includes FinTech start-ups, FinTech companies, fintech-related employment, and fintech-related IP, among other categories.

It is a term used to describe the convergence of technology and finance. Fintech innovation accelerates and replaces how people do business in their daily lives, making it easier, faster, and more convenient.

Fintech industry

The global fintech industry has been growing rapidly worldwide, but the impact was not felt equally across all industries and countries. In the US, for example, fintech has created jobs in what was a lackluster industry. Banks used to account for about ¾ of the nation’s economic activity, but today they are a small portion. The sector has also become more profitable, with profitability margins rising to an all-time high in 2017.

One of the most important innovations of the new fintech world has been the reduced role of “human gatekeepers” and the emergence of new models (typically FinTech companies) that are helping to connect consumers with financial services in new ways.

1. Blockchain technology

Blockchain is a distributed ledger that can efficiently record transactions between two parties while providing transparency to the records. This makes it perfect for tracking the movement of funds through cryptocurrencies.

2. Artificial intelligence (AI)

Artificial Intelligence has been used in many industries, but its potential benefits in finance are still being explored. AI can help automate tasks, detect fraud, predict trends, and even make better financial decisions.

3. Distributed ledger technology (DLT)

Distributed Ledger Technology is a shared and decentralized database of information called blocks. DLT works like a digitalized spreadsheet; each block contains data about the transaction and the time it was added to the chain.

Read More: Sharing Economy vs Gig Economy: What’s the Difference?

What are Banks?

The banking world is a complex one, with many different types of jobs and an enormous amount of terminology to learn. As a young banker, it’s essential to learn the basics of the field and keep an open mind and explore the wide range of opportunities that exist. The first step in doing this is to learn the different types of banking jobs, and the second is to understand the terminology used in the field. This article will help you do both of these things.

Intrusive banking regulations, high unemployment, and the 2008 financial crisis have all impacted the economy. Banks have become less profitable, and many small businesses have been forced to close their doors. Luckily, there are new alternatives to traditional banking, such as online banking, which have helped alleviate some of the problems that traditional banking has caused. At the same time, the growth of online banking has also led to the emergence of internet-based banking scammers, who try to trick people into providing their personal information.

1. Bank Accounts

A bank account is where money can be stored safely and securely. Banks are usually safe places to keep your money, but they aren’t always the safest. If you have any money that you don’t want anyone else to know about, then a bank account might not be the best option. There are other options out there that may be safer than banks.

2. Credit Card

Credit cards are great if you need to make large purchases. You can use them to buy things online or at stores. They are also helpful if you need to pay someone back. But, there are some drawbacks to credit cards. First, you have to give your credit card information over to businesses.

This means that your credit card number could end up being stolen. Then, once your purchase is complete, you’ll have to wait until the business sends you a bill. When you receive the bill, you’ll have to send payments right away or face late fees.

3. Debit Card

Debit cards work like credit cards. However, instead of giving your credit card information to businesses, you give your debit card information. So, instead of getting charged interest, you get charged right away. That’s why debit cards are often used for everyday purchases.

Conclusion

Keeping up with the changing landscape of financial services has become a full-time job. From the rise of online banking to peer-to-peer lending, traditional banking has been forced to adapt. One response has been to invest in fintech — a catch-all term for the emerging ecosystem of financial technology companies that aim to provide better services to consumers and businesses than traditional banks. But what is it, where did it come from, and what is it doing to the banking industry today?