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Role Of Technology In Finance

Role Of Technology In Finance

Since the start of the 21st century, there has been a spurt of technological innovations in financial services. When technology is integrated with financial services, it is often referred to as ‘FinTech.’ Fintech aims at making it easier for individuals as well as businesses to undertake financial transactions. With the help of such innovations, it has not become possible to conduct seamless transactions from any corner of the globe. All it takes is having a computer set up and access to the internet.

One of the biggest technological advancements in banking has been the invention of online banking. Various products like internet banking, mobile banking, UPIs have brought a revolutionary change in how the entire banking sector works. In the past, all financial transactions undertaken were carried out by physically walking into the bank. The bank used to process the request of its customers on which it charged nominal fees, which we refer to as ‘bank charges.’ But now people have been able to undertake transactions and put in their specific requests for financial services right from home. It has saved the time and effort of both customers and bankers. The savings in time and effort are also one reason why banks have been able to cut the ‘bank charges’ used to levy on their customers.

With the advent of FinTech, many unbanked individuals have also been encouraged to join the banking network. It has benefitted the economy since transactions that were earlier happening through cash have now been shifted to the electronic mode, which brings more liquidity in the economy. Thanks to the launch of digital wallet applications such as Google pay, they have paved the way for economies to go completely cashless.

Other advanced FinTech innovations include blockchain and cryptocurrency. Blockchain is essentially a chain of blocks that store information. To explain it better, various databases are connected through the internet, which maintains information securely. It works on the concept of ‘Distributed Ledger Technology.’ Whereas, cryptocurrency, in its simplest sense, is a virtual currency, the pricing of which is based on a uniquely designed algorithm. Cryptocurrency operates on a blockchain. Both innovations have completely disrupted the financial market.

Needless, to say, financial services and the banking sector have advanced exponentially due to the technology changes happening around it. Thanks to more and more techies and startups contributing to the development. With the kind of data available now and the analytics used on such data, a hi-tech banking system does not seem to be a very distant dream.