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Chapter 1-Introduction To Fintech

Fintech refers to financial technology companies that use software to disrupt and improve traditional financial services. The chapter discusses the history and rapid growth of the fintech industry. It notes that searches for "fintech" increased 7500% in the last decade and that the mobile payments market is estimated to reach $12.07 trillion by 2027. The chapter also summarizes that fintech deals and investments have grown dramatically in recent years, with $94.1 billion invested globally in 2021, a 327% increase since 2015.

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Farheen Akram
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19 views

Chapter 1-Introduction To Fintech

Fintech refers to financial technology companies that use software to disrupt and improve traditional financial services. The chapter discusses the history and rapid growth of the fintech industry. It notes that searches for "fintech" increased 7500% in the last decade and that the mobile payments market is estimated to reach $12.07 trillion by 2027. The chapter also summarizes that fintech deals and investments have grown dramatically in recent years, with $94.1 billion invested globally in 2021, a 327% increase since 2015.

Uploaded by

Farheen Akram
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Chapter 1

Intro to Fintech

In this chapter, we’ll define fintech, explore its origins, and dive into statistics
showing just how fast the industry is growing.

What is Fintech?

Fintech, short for “financial technology”, refers to any application of new technology
(specifically, software) designed to disrupt, enhance, or replace traditional financial
services.

Searches for "FinTech" have gone up 7500% in the last decade

Disrupting Legacy Financial Services


For businesses, fintech companies aim to help clients reduce expenses while
improving the speed and efficiency of their systems, processes and operations.

For consumers, fintech companies attempt to offer easier, more convenient, and more
streamlined financial services. Most of which are designed to grab market share from
traditional financial services companies and the legacy banking system.

In both situations, however, the end goal of fintech is the same: changing and
improving existing financial systems.

In most cases, they do this by adapting to the market more quickly, serving under-
served segments of the countries they operate in, and launching easier, more
convenient solutions.

A Brief History of Fintech

While industry pundits didn’t discuss financial technology as its own industry until
2014, fintech is considered to be in its third “phase” right now (similar to how we
went from Web 1.0 to Web 2.0 and are now seeing the first manifestations of Web3).
The first (and longest) epoch kicked off when Diner’s Club launched the first publicly
available credit card in 1950. From there, one could argue it ended around the mid-
2000s (at which point 80% of banks offered online banking services).

Mobile, Blockchain, and Fintech 2.0

Fintech entered its second phase (known as Fintech 2.0) in 2009.

This was a massive turning point for the industry, as it marked the year in which
Bitcoin, Stripe and Square launched (all of which laid the foundation for the industry
as we know it today).

While it's hard to say exactly when we transitioned into the current 3.0 era, one could
argue 2021 was yet another pivotal turning point in the industry.
2021 Was a Pivotal Year for the Fintech Industry

2021 was the year two of the industry’s largest players - Coinbase and Stripe -
reached double-digit billion-dollar valuations. But more important, 2021 was an
explosive year for cryptocurrency and blockchain technology.

Regardless of how you define the epochs, however, there’s one thing no one can deny:
Financial Technology as an industry has absolutely exploded since 2014.

Fintech’s Explosive Consumer Adoption Rates General


Reading)
On the B2C side, adoption rates show consumers are warming up to fintech in a big
way. In fact, the mobile payments market (which is arguably the largest sub-segment
of the industry) is estimated to reach $12.07 trillion dollars by 2027 (with 75% of
consumers worldwide using some kind of mobile funds transfer or payment method in
2019).

And while consumer adoption rates are impressive (210 million Americans use
fintech products), the investments and deals being made on Wall Street are even more
eye-popping.

Fintech Deals Are Red Hot Right Now (General Reading)

In 2015 there were 1,994 fintech investments made (globally) worth $21.8 billion. By
2021, however, that number climbed to 3,549 deals worth $94.1 billion (a 327%
growth rate over six years).

In many cases, those investments paid off quite handsomely.

As an example, in 2019, there were 57 fintech “Unicorns” (meaning the company had
a one billion dollar or higher valuation) with a combined aggregate valuation of $192
billion between them.
By 2021, just two short years later, there were 167 Unicorns (more than a 200%
increase) with a combined aggregate valuation of $665 billion between them (a more
than 240% increase).

With money into fintech companies like water, it's no wonder fintech companies
accounted for one out of every four “Unicorns” in 2021.

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