What Are The FinTech Sectors?
It can be asserted that fintech proves to be a highly innovative technology that contributes to creating products and services that are different from those that dominate the financial sector. Conversely, they can generate a clean break from the past, competing with the dominant technology to gain an essential role in a consolidated market. And financial institutions find themselves in the position of needing to pay attention to the change introduced by these financial services. We, therefore, present a quick overview of the main areas of fintech
These are the many solutions devised by those who work in the fintech branch to make available to people with low incomes a whole series of accessible alternatives to essential financial services. In this regard, more and more companies in the fintech area are acting in developing markets. As a result, it is easy to see how strategic this fintech sector is.
This is an emerging area of fintech, where banks allow third-party companies to create mobile apps and services, starting from using internal data. Therefore, with open banking, all you do is set up APIs to facilitate communication between financial sector institutions and external suppliers. The advantage for customers, thus, translates into total control of banking data and financial decisions.
Also referred to as smart contracts, they are computer programs whose primary mission is to automatically execute contracts between supply and demand, i.e., between buyers and sellers. Many are strongly betting on it, mainly optimizing the timing and costs of transactions that always require human intervention. To give a concrete example, in the case of one of the most used digital currencies, such as Ethereum, smart contracts are treated as decentralized scripts stored within the blockchain. In this way, one can always use them in the network for what concerns the following execution.
They are beneficial platforms because they use financial-type algorithms to automate investment advice. A company that decides to rely on Robo-advisors saves on human and management costs.
With various cutting-edge technologies, making entry into the insurance industry more accessible to all becomes feasible. Efficiency also appears to be improved. An aspect to consider is that numerous traditional insurance companies, in this historical moment, are struggling. The underlying reason lies in the rise of various start-ups, active precisely in the insurance sector.
This is the regulation of financial markets through the use of technology. The latter has the task of facilitating access to companies wishing to enter the financial market as protagonists. All of this, of course, considers the laws regulating financial services. There has been a real boom in start-ups, with core business focused on regtech. They intended to ensure that financial companies could comply with the regulation. Among the areas of intervention of regtech are the KYC (Know Your Customer) processes, aimed at identifying contacts. This way, the risks of financial scams or computer fraud are minimized. Furthermore, the automation and digitization process dedicated to anti-money laundering legislation is also fundamental.
This is the Initial Coin Offering. More precisely, it consists of a financing method mainly adopted by technological and financial start-ups that use the blockchain. The process focuses on selling units of cryptocurrency issued by the start-up on duty against cash consideration. ICOs do not differ much from IPOs, i.e., initial public offerings, where investors buy the shares of a company for the first time. However, what is different is that ICOs refer to those who finance a project through crowdfunding.