Understanding Fintech’s 4 Most Notable Components
You might have heard some people mention the term “fintech,” but you might not know its exact meaning. Fintech combines the terms finance and technology. This word has become popular in some circles where individuals and companies use the newest financial technology forms.
This tech can shake up the financial sector, and by all accounts, it’s doing that already. Investing in fintech might make sense for individuals who need money.
If you need money urgently, you can always leverage assets. You might look into who buys out title loans if you’re leveraging your vehicle for cash. You can also leverage your house and get a secured loan from a credit union or bank.
Doing some fintech investing might make more sense for you, though. Let’s talk about the four fintech pillars that comprise this emerging industry’s core.
Cloud computing makes up one of the four pillars. Cloud computing means you have computer system resources that you access through an on-demand structure. You get computing power and data storage capabilities. However, you do not have active, direct management. Another entity controls and manages those resources for you.
If you switch over and do cloud computing as a business entity, you leave your data processing, storage, and management to remote servers. In the past, you would have those servers on your premises, and you would monitor them yourself.
Cloud computing essentially makes that notion obsolete. Many individuals in the business world like this option because you can have some other company, like IBM, manage all your data storage and processing, and they take care of all your security and other details. That frees up time and energy that you can use for other work-related tasks.
Fintech also uses AI, or artificial intelligence. Many processes and industries use AI right now and more join this trend every day.
AI means machines that infer information. They also synthesize and perceive it. Humans do this as well. In other words, you have machines that process information and use it, which essentially means thinking.
Machines that demonstrate intelligence have existed in science fiction for many years, but they now exist in real life as well. AI-infused technology can potentially help humanity in many ways. For instance, an AI-infused analytic software suite can assist a company with its logistics. It can help their end-to-end production, product storage, and shipping.
Fintech utilizes big data as well. Big data means collecting, storing, and interpreting enormous data sets. Companies now collect data in various ways. For example, they will collect data using cookies when someone uses a web browser. They might use social media platforms for data collection as well.
Companies then pay these data collection centers for customer information. Using this data, they make decisions about what products they will make or services they’ll offer moving forward. The more information these big data companies collect, the better they can predict human behavior, either individually or collectively.
Blockchain is fintech’s fourth and final pillar. Blockchain can monitor transactions by inserting them into an immutable, permanent ledger. Within a business network, blockchain can track and record a transaction. It can monitor money’s originating point and where it goes with pinpoint accuracy, which is why the financial industry finds it so useful.
Blockchain works like an advanced database. With it, companies and individuals can get transparent and accurate information sharing. When you set up a blockchain database, it stores data as blocks that then link up into a chain, hence this technology’s name. Blockchain and crypto often go together.
If you have money and want new investment opportunities, looking into the fintech sector can pay dividends. Fintech’s influence has grown recently, and that should continue as this young century progresses further.
You can research and put money into fintech companies on the stock market. Many have become publicly traded companies. You can put money into smaller startups with cheaper stock, or you can back more established ones.
When you do so, you’re putting money into new and emerging technology. Some people feel that’s wise since this tech can transform the banking industry and other sectors. Some fintech companies have technology coming with incredible potential. It can change banking, but also healthcare, transportation, and other industries and niches.
Fintech shows potential, and it should stick around for many years. New technology emerging from this industry could change our daily lives, so putting your money into it makes sense.