15 Things You Didn’t Know About the Fintech Industry

it's fast become one of the big buzzwords in business and technology it's one of the hottest properties to invest in and you can be sure it's only going to get bigger and bigger but stick with us until the end and you'll see how a lot of people have no idea what the word fintech even means welcome to alux.com the place where future billionaires come to get inspired if you're not subscribed yet you're missing out you don't need a degree in computer science or finance to figure out it's an abbreviation for financial technology but when it comes to fintech whether you're in the dark or well clued up we thought we'd shed a bit more light on this hot topic number one traditional banks are worried about it and with good reason too that's because until a few years ago banks had a tight hold on pretty much anything we did involving money and being the huge bloated dinosaurs that banks are there wasn't exactly much incentive for them to innovate or be competitive fast forward a few years and a few leaps ahead in digital technology and it was time for smaller more agile players to make an entrance you got it fintech and in the last decade they've been giving banks a real run for their money as innovation expert and fintech vc arvind sankharan put it we're witnessing the creative destruction of financial services rearranging itself around the consumer who does this in the most relevant exciting way using data and digital wins so the more you see the word fintech cropping up in your news feeds you can be sure the more headaches old-fashioned bank managers are getting number two the term includes sectors you probably didn't think were fintech put simply fintech companies unbundle all the different types of financial transactions that banks traditionally do and as each fintech tends to specialize in just one area they focus on doing it in a way that's efficient and streamlined and as user friendly as possible on a digital interface and at a low cost to the consumer that includes platforms that are already fairly obviously fintech like platforms that let you make payments online or in stores square or paypal platforms that let you trade stocks like etoro or robinhood and anything digital you use to apply for a loan the fintech label also includes cryptocurrencies and the crypto trading platform coinbase and the so-called neo banks like chime transferwise or revolut but there are other players you may already be familiar with but hadn't thought of as fintech crowdfunding is also considered fintech so it includes the likes of kickstarter and gofundme and if you make or receive payments via patreon you're also using fintech or if you've raised money or donated money via online charity fundraising platforms that's fintech too and there's fintech specifically for medicare one example is oscar an american health insurance company that uses i.t to shake up the health care system making it easier and more transparent to make medical claims all at a reasonable cost number three it's lifted millions of people out of extreme poverty one thing that fintech does a great job of is bringing financial services to people who couldn't access them before often that means people who didn't have a regular income or a permanent address and fintechs allowing them to build wealth and escape the poverty trap a case in point is m-pesa it was released in kenya in 2007 and basically transforms your smartphone into a bank account it allows users to make and receive payments make online deposits all in a secure way and it gets credit for having reduced crime in a society that used to be mostly cash and prone to theft in fact since m-pesa was launched in 2007 it's raised 2 percent of kenyans around 200 000 households out of poverty as well as many other people in different countries throughout africa where it's also used and we think that all of this means fintech deserves some serious kudos number four it's revolutionizing the loans market looking and applying for a loan is a great example of how traditional banks were drowning in bureaucracy and how fintech has shown us all it can be improved and streamlined for a lower cost now it's possible to find a whole range of apps and websites that help you compare prices of credit card loans in a way that banks didn't used to do that includes peer-to-peer lending platforms like prosper marketplace and a lending club sites for business loans like cabbage and lendio and fintechs that lets you apply for mortgages which take traditional brokers out of the equation and approve loans faster and in 2016 american fintech sofi which helps with student loan refinancing became the first online lender to get a aaa credit rating number five they could make traditional credit ratings obsolete anybody who's ever taken out a loan knows how your credit rating is the holy grail when it comes to being able to access money a bad credit score shuts off all kinds of opportunities and it's difficult to shake off this is something else that fintech has been busy disrupting that's thanks to fintech lenders like affirm which offers loans to people with bad or no credit ratings and also helps them build up their credit rating or upstart which uses totally different data than usual like employment history to determine how creditworthy you are and all this means that soon enough we could be seeing the end of credit ratings as we know them number six cyber security is still a big concern of course it comes with the nature of fintech companies that they would hold huge amounts of sensitive data and there are high risks if all of that gets stolen and along with all of the good news around fintech it's worth noting it's not all rosy we do need to be careful figures from last year show that 27 percent of fintech companies have experienced a security incident and 29 aren't sure because they haven't checked with more investment and more transactions being made through fintech this is likely to improve in the future but it still goes to show just how seriously we should be taking cyber security and while we're on the topic we're going to take the opportunity to strongly recommend that you have a vpn just one click makes your digital footprint anonymous it keeps prying eyes away from your online activity and transactions are more secure that's as well as other perks like letting you access sites and content that wouldn't usually be available in your region here at alux we use nordvpn and right now you have an amazing offer especially for our community just go to alux.com vpn and you can get two years worth of vpn services for only 89 that's a 68 discount alexers make sure you have yourself covered when it comes to online security and make the smart choice number seven investment in fintech is going up exponentially with so many movers and shakers of the last decade being fintech this one shouldn't come as that much of a surprise over 300 billion dollars has been invested in fintech in the past decade and according to goldman sachs the market worth of all fintech firms is 4.7 trillion dollars that includes investments made by big tech firms into their own platforms like apple pay and google wallet as well as the financing that's been secured by a large number of startups which is about 12 000 fintech startups across the world number eight the word fintech originally described the backend technologies of traditional banks the first time most of us heard the word fintech was probably sometime in the last decade but the first recorded use of it goes back a lot further to 1971. it was originally used to describe the back-end technology used by banks and big financial institutions kind of ironic seeing as now we use it to talk about their competition and the first fintech that really went global is a company we all know well paypal which launched in 1998 by one of our favorite people here at alux elon musk although it wasn't until quite a bit later the term fintech was used more widely number nine it's a huge user of machine learning as fintech offers cutting-edge products it stands to reason they use the most cutting-edge new technologies and are some of the biggest users of them and none more so than machine learning and ai one of fintech's most famous uses of ai is in so-called robo-advisors now sure they might sound like armor-clad law enforcement agents from a dystopian future but the word actually refers to algorithms that automate investment advice and basically they do the same job as financial advisors but at a lower cost and another way fintech companies use ai is in their cyber security to fight online fraud they do this with computer programs that use information about your payment history to flag up transactions that are outside of the norm number 10 and other new technologies too yep fintech uses all kinds of new technologies like chat bots which assist customers with basic tasks and cut down staffing costs or an area called predictive behavior analytics used in car insurance apps like route insurance basically the app tracks a driver's movements and assesses their driving skills and adjusts the premium rates based on their performance behind the wheel and of course blockchain which was developed specifically to record transactions of bitcoin and is closely connected with one of the most talked about areas of fintech crypto number 11. they can improve your spending decisions in case you're one of those people who finds it difficult to make the right decisions when it comes to money we've got good news for you it could be fintech that saves the day that's because one area of fintech that's been getting lots of users are personal finance apps with apps like mint money dashboard and credit karma you can use budgeting functions to help you spend less and hit your savings goals and some apps use gamification to add some fun into saving which is not usually known as the most fun activity to do as practical as it may be and a lot of research shows that they actually work and help people save more money and feel more satisfied about their spending decisions number 12 the world's biggest fintech is a subsidiary of alibaba for those of you who don't spend a lot of time in china it might not be that familiar a name to you but at the moment the world's biggest fintech company is chinese ant group valued at over 60 billion dollars and with 10 000 employees it also owns several major financial services like alipay the largest online payment platform ua-bow the world's third largest market fund and a credit rating system sesame credit and if you've been paying attention when you heard that one of these services is called alipay it probably didn't take you long to figure out that it's part of the alibaba group which means along with apple pay google wallet and jack dorsey's square they're one of several fintech companies that have a regular tech company backing them up number 13. asia is the biggest consumer of fintechs that's not just in terms of the number of people using them but also the percentage of the population according to an ernst young survey china and india have the biggest fintech usage both with 87 percent of people regularly using fintech while south africa was in the third spot with an adoption rate of 82 percent number 14 but the usa is the biggest producer it won't come as much of a surprise that silicon valley has the highest concentration of fintech space there but there may be a few surprises on the list of the world's top 10 fintechs especially if you weren't expecting to see any baltic countries make the top ten but two of them do lithuania in fourth place and estonia at number 10. after north america asia is the second biggest home of fintechs with singapore taking third place globally number 15. fintech is known for its relaxed work ethic traditional banks have always been seen as stuffy and old-fashioned places to work not exactly the kind of workplace you can roll up to in jeans and a t-shirt but in their relentless quest to modernize the world of finance fintech has gone in the opposite direction fintech workplaces are known for their casual dress code as well as perks like staff happy hours and in-office yoga classes and that's something that's posing a threat to traditional banks as fintechs are finding more and more ways to bag top talent in finance so alexers what other changes in the way we use money do you think fintech will bring to us in the future let us know in the comments now for sticking with us until the end here's your bonus it may be revolutionizing money but most people still don't know what fintech is fintech is all around us more and more of us are using it more and more money is changing hands through it and fintech companies are getting more investment but according to an ernst young survey made in the usa 63 percent of people have never even heard the term fintech before as well as those that couldn't recall having ever heard the word fintech another 21 said they'd heard the word but had no idea what it meant and only 16 could even attempt to give a definition hey luxers we know how you like to stay well informed when it comes to the important things happening in our world so we're sure a lot of you were in that 16 and we're well clued up on ventec and we hope you now know even more about it after watching the video and if you weren't in that 16 don't worry we're confident you know what it means now if you enjoyed this video be sure to hit that bell and subscribe for more quality content every day [Music] do

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Id: uwsoyTPAduY

Length: 14min 2sec (842 seconds)

Published: Wed Oct 07 2020