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Definition

FinTech

FinTech (a portmanteau of financial tech) is the use of new technology and delivery models to complement or compete with traditional financial service delivery processes. An important focus of the FinTech industry is to develop safer, more cost-efficient business models to support the exchange of money and other measures of value. 

FinTech business models often focus on mobile customers and services are usually accessed with a software-as-a-service (SaaS) delivery model. By digitizing traditional finance-related workflows, small FinTech startups can compete with traditional banks for customers. Apps usually have a niche focus and may be subject to lighter regulatory scrutiny than their banking counterparts because of their limited scope.

The ability of FinTech apps to provide customers with safe, convenient money transfers and automated services has been cutting into banks’ traditional income sources and disrupting the status quo in recent years. Examples of disruptive FinTech apps include those that: 

  • provide consumers with free credit scores
  • allow merchants to accept online and mobile payments
  • use blockchain to maintain a distributed ledger for digital currency
  • use Near Field Communications (NFC) protocols to support proximity mobile payment systems

This was last updated in May 2018

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