From the course: Finance Foundations
What is fintech?
- [Instructor 1] FinTech is the use of technology in the field of finance. One example of FinTech is the use of banking apps on smartphones, rather than physically visiting a bank. - FinTech also involves financial data being collected and transmitted automatically through sensors connected to the internet. For example, a sensor in the factory of a loan customer can be used to monitor production quantity. - Another example, sensors confirming vehicle usage detail for auto insurance purposes, or grain quality in storage silos, webcams monitoring foot traffic in a retail shopping mall to help determine rental rates. - FinTech is artificial intelligence programs exploring vast quantities of big data to detect patterns, make forecast, and design financial products specifically tailored to the needs of an individual customer. - [Instructor 1] FinTech is online markets matching investors with companies that want to borrow money or companies that are seeking additional funds from new owners. - FinTech is blockchain technology replacing the centralized databases of big financial institutions and storing cryptographically secure data on many computers in a network. - And speaking of cryptography, the highest profile example of FinTech is cryptocurrency, an electronic currency that's not controlled by any centralized bank or government. - [Instructor 2] With many people spending lots of time isolated in their homes during the COVID pandemic, the growth of FinTech was accelerated in 2020. - Now, do you have any personal experience with FinTech? - Yeah, last year, I experienced the flexibility that FinTech can offer over traditional banking. - What happened? - Well, I wanted to send some money, a little gift to each of my children. - Well, there's no problem there. Just do some bank transfers. - Yeah. Well, it didn't work. My bank restricted me to making only a certain dollar value of transfers each day. Sending the money to my children would've required making piecemeal transfers every day for a week. - So, what'd you do? - I used FinTech. In this case, I used a PayPal account that I had previously connected with my bank account. - And how did PayPal help? - Well, I was able to make all of the transfers in just five minutes. PayPal took the money from my bank account and sent it to each of my children. - So, you used the flexibility of FinTech arrangements to get around your bank restrictions. - Yeah. Now, how about your FinTech experience? For example, do you ever make payments using some kind of app on your phone? - Sure, just last week, I paid for my haircut using an online app called Venmo. - You got a bad deal on that haircut. You have to pay to get those two or three hairs trimmed? - You're killing me, you're very funny. Actually, I find Venmo very easy to use. I sit in the barber chair, put in the identifier of the person who cut my hair, push the button, I'm done. - My wife, Ramona, uses that same procedure when she wants to reimburse one of our children for something they bought for one of our grandchildren. - Okay. Do you have any personal experience with that FinTech poster child cryptocurrency? - Actually, I do, indirectly. A few years ago, one of my sons was a cryptocurrency miner. - A miner, what does that mean? - We'll talk about that in our module on Cryptocurrency. - FinTech is using technology to change the way we make payments, get loans, gather information to monitor the behavior of borrowers, and even store sensitive financial information. - Venmo, PayPal, cryptocurrency, blockchain, online loan markets, FinTech is something we all need to know more about.
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