Fintech
What is Fintech? – College Advice
Published at 9am on Monday, July 15, 2024
Students work on computers in the Kaplan Finance Lab at UW-La Crosse.
The professor answers the most common questions about a growing sector
Fintech, or financial technology, is a growing field that is transforming the banking industry by using computers to provide financial services and solutions.
UW-La Crosse Computer Science & Computer Engineering Professor Kenny Hunt answers some common questions about Fintech below. UW-La Crosse Computer Science & Computer Engineering offers Post-Graduate Certificate Programs in FinTech in collaboration with UW-Parkside and UW-Extension.
Meaning of Fintech
The field of financial technology, also known as “fintech,” describes the use of information technology to provide financial services and solutions. Fintech covers topics such as cryptocurrencies, blockchain, payment systems, crowdfunding platforms, lending platforms, regulatory compliance, and risk management systems, among many others.
How will fintech impact the future of banking?
Fintech has already transformed banking through the use of mobile apps that enable deposits and fund transfers along with fast and convenient fund transfers through systems like Venmo and PayPal. In the future, these systems will expand as well as systems that support robust security and fraud detection, more efficient lending and borrowing platforms, digital contracts, robotic process automation, and cross-border payment systems that enable faster and more convenient international trade.
Can FinTech Replace Banks?
Fintech does not compete with banking, but it enables and enhances the services that banking provides. Traditional banks provide a variety of important services that computer systems cannot duplicate. Many customers appreciate the personal interaction and financial advice that these venues provide. Banks are also heavily regulated and are therefore perceived as stable and secure service providers that similar fintech startups may not be able to match for some time.
Are fintech companies regulated?
Fintech companies are regulated, but the extent and nature of these regulations can vary significantly by country and the type of services provided. Some areas of financial technology are so new that regulators have not yet figured out how best to regulate them, if at all. Cryptocurrency is a prime example, as regulatory frameworks impact areas such as taxation, reporting requirements that seek to mitigate financial fraud, and licensing requirements.
How the Fintech Sector Works
The fintech industry uses information technology to provide a wide range of financial services. These services typically connect to a variety of specialized platforms over the Internet that perform tasks such as authenticating users, encrypting data for added security, using AI and machine learning to detect fraud, along with sophisticated data analytics engines that ensure the application complies with all reporting and regulatory requirements.
What are the career prospects for the Fintech sector?
Career prospects in financial technology are strong, with job growth expected to be 12% above average over the next decade. While specific fintech jobs vary widely, annual salaries in the sector are very high. The median salary in this sector is around $84,000.
Fintech Careers
Careers span a wide range of skills, from a less technical business focus to a more technical IT focus. Tax manager, financial analyst, digital finance manager, risk analyst, business analyst, software developer, and software manager are some of the specific career titles in this discipline.
What are the latest innovations in financial technology?
While the entire fintech sector is relatively new, I would like to highlight smart contracts and decentralized finance (DeFi) networks such as Ethereum or Bitcoin.
What is the largest fintech company?
Major players in the industry include companies like Robinhood, Visa, Ant Group, Fiserv, Mastercard, Stripe, PayPal, and Block (you probably know them from their CashApp app).