How Is Data Being Used In FinTech?
Financial technology, or FinTech, is one of the fastest-growing industries today. It is ever-evolving as the demand for FinTech services continues to rise. Whether you are buying a coffee with a payment app or managing your finances online, you likely have used FinTech in your daily life.
What is FinTech?
FinTech describes a new sort of tech that emerged in the 21st century and is used to improve and automate financial services. It has shifted to more customer-oriented services that keep the user in mind and are used to help consumers, business owners, and companies manage their financial operations and processes.
Through specialized software and algorithms, FinTech has altered the way consumers can access finance via smartphones and computers. According to recent statistics, about one-third of consumers will use at least two or more FinTech services in their lives. And we are growing increasingly more aware of, and dependent on, FinTech on a semi-daily basis.
How is FinTech used?
In its essence, applications of FinTech include any variety of financial activities—especially when managed or operated through virtual measures and without the assistance of a person. This includes cheque deposits via smartphones, money transfers, managing investments, bypassing a branch for credit applications, and more.
FinTech is present in many different sectors, such as education, fundraising, investment management, non-profits, and retail banking. In keeping with cutting-edge technology and financial advancements, FinTech also supports the development of cryptocurrencies like Bitcoin.
Considerations in FinTech
With FinTech being part of two fast-developing sectors, advancements are being made constantly to support and strengthen FinTech services. These include:
Consumers
FinTech relies on analyzing consumer behavior and societal changes in order to keep pace with the changing market and user needs. New consumers in FinTech are especially important, including younger users like millennials and Gens X, Y, and Z.
Latest technology
Technologies such as AI, blockchain, cloud computing, and IoT are major factors in powering FinTech. Keeping their services up to date with the latest enhancements to tech is essential.
Information access
Through data and other information storage, FinTech is able to widen its access and adjust to trends and user needs quickly. It can also tailor financial services very specifically.
Investments
Because the industry is experiencing such growth and revenue, investors are eager to be a part of FinTech, which means ample funding and means to keep the technology cutting edge.
The importance of big data
It’s no secret that all technology involves data, and financial technology is no different. Because FinTech relies on analyzing its customer base to be most efficient, data information is crucial. And as more people come to rely on digital financial solutions, such as apps, virtual money transfers, online banking, and internet transactions, the amount of data involved also grows, becoming Big Data.
What is big data?
This refers to all data or information compiled by users’ electronic devices—laptops, PCs, tablets, phones, etc. Data records all their interactions, searches, preferences, and histories, essentially becoming a giant virtual fingerprint. When all this data information is analyzed, companies can use the statistics and user preferences to fine-tune their services.
The value of data in FinTech
Because FinTech companies measure their efficiency and effectiveness from accumulating and processing data, access to this data is essential. According to tech blogger Antoine Bechara, “Attracting and keeping customers is half the battle of any industry, and FinTech collaborates with big data analysis to create the most effective platform and personalized services.”
Bear in mind that because the industry of financial technology is growing and has plenty of internal competition, FinTech companies will want to keep their services optimized to what customers want.
Summing up
Data has been called the most valuable resource we have, so you can rest assured that your own personal data is making a difference. It all adds up, and FinTech companies are genuinely reliant on your information.
However, this use of data brings up a point of contention—ethics. When working with a user’s personal data, companies must remain ethical. New regulations continue to emerge for user permissions, such as browser cookies for data collection, so companies can remain ethical when dealing with their consumer’s personal information. Utilizing data analysis is key for FinTech companies, but so is protecting individuals’ security and privacy.
By giving consumers direct access to their financial lives through the latest technology, FinTech has become a crucial part of many people’s everyday lives. And while your data is necessary to keep the industry as customized and personal as possible, privacy regulations are in place to maintain your security at all times.