Home Thinking Aloud What’s FinTech, And What Does It Mean For Your Business?

What’s FinTech, And What Does It Mean For Your Business?



by Andriy Skoropad, co-founder & CEO at Perfectial

You know PayPal, have heard of Bitcoin and, probably, even stumbled upon the term FinTech a few times. But have you a clear understanding of what exactly does this word stand for?

Some claim that all possible interactions of finance and technology, which I guess includes credit cards – the 1950’s invention, are FinTech. Others narrow down its meaning to just startups that aim to disrupt incumbent financial systems.

Despite discrepancies, however, everyone is certain of this – FinTech is huge. The industry reached $15.5B in investments in 2015, $15.2B in 2016, and is expected to raise $46B of annual funding in 2020.

So, let’s shed a light on what FinTech is, talk about its history and impact on businesses worldwide.

What is FinTech now?

The term, itself, is a compound of “financial” and “technology”. Currently, people understand it as application of modern software for financial services.

FinTech businesses can be startups that offer traditional financial operations at a cheaper cost or in a more convenient manner, established financial firms keen to apply innovations or just tech companies that provide their own payment tools.

All in all, there are 16 different categories of FinTech at present, according to Venture Scanner. However, describing them all would be out of the scope of this article.

So, here are the three branches of Finacial Technology you definitely should know about, the most attractive ones for Venture Capitalists:

  • Consumer Lending (raised $16B in 2016)
  • Payment Backend (raised $10,5B in 2016)
  • Business Lending (raised $9.8B in 2016)

FinTech’s history.

FinTech had started to grow popular soon after global financial crisis happened, fueled by public’s distrust of banks and incumbent legacy firms, and then exploded in 2015. The industry was appealing mostly to individuals at first. It offered independence from financial establishments, which in the wake of 2008 were universally considered unreliable, and mere convenience. “Why stand in line and sign a plethora of papers in the bank, if you can pay/send money/etc., using your phone, in terms of minutes?” That was basically the message of most advertising campaigns of FinTech companies back then.

Soon after, though, banks eliminated the threat. They began to finance exciting startups, helped them scale, and incorporated their services into own infrastructures; or even commissioned the potentially disruptive products to prevent them from competing with their businesses.

So, FinTech industry of today is not seen that much as a rivalry of existing financial institutions; rather, as a force that drives innovations and compliments financial systems in general.

Why does FinTech matter to you and your business?

Small businesses, in my opinion, are the biggest winners of the FinTech revolution. There’s no longer a need for aspiring entrepreneurs to visit banks or even seek for investors to get financed. Instead, one can use crowdfunding.

If you’re passionate about a business idea, develop a product’s prototype; come up with a catchy description for it, explain clearly its benefits and launch a Kickstarter campaign. If there is demand for what you offer, you’ll get the money shortly. Sounds like a fairytale, doesn’t it? Well, such prominent companies as Dwarven Forge (raised $8,2m through Kickstarter), Bragi ($3.4m) and Elevation Lab ($1,6m) are a living proof that crowdfunding is very much real and efficient.

The next field FinTech has reshaped is remittance. Companies like Azimo and Transferwise help to send money overseas for the fee 8 times smaller than that of most banks. I can’t think, really, of a matter more crucial for international businesses.

And then there are investment robo-advisors, like Betterment, that evaluate risks, plan portfolios and allocate assets for you; peer-to-peer lending platforms, like Prosper, that help you get loans easily and mobile payment systems, such as Apple Pay, that facilitate your business. It looks like there have never been more opportunities around for anyone who wants to make money.

Ave FinTech!

Summing Up.

The article above, surely, does not describe FinTech completely. There is way more to this industry than can be packed into one post and if you’d like to delve into the subject deeper, feel free to start from Perfectial’s FinTech Expertise Page.


Andriy Skoropad

Andriy Skoropad is a co-founder & CEO at Perfectial, a software development company recognized by Clutch as a top provider of .NET and Ruby on Rails application development services for U.S. and European markets. With over 17 years of experience, Andriy successfully applies his versatile skill set to help businesses kickstart, develop and succeed.


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