What is Fintech, and How Fintech Products Are Changing The World

Updated: October 15, 2019

The first time I heard the term “fintech” was at a tech startup networking event; from a guy, who talked about cryptocurrencies and explained what Bitcoin is.

It was an interesting evening, and I got to see a glimpse of what could be the future of the financial industry. Attending several more similar events was enough to convince me that a fintech revolution is coming.

That was almost a decade ago; and a lot of the innovative ideas I heard back then are now a reality. In fact, I use several fintech products and services today that didn’t even exist 5 years ago.

What is Fintech?

Fintech is “financial technology” and refers to technology as it applies to the financial sector. This includes areas such as payments, insurance, investments, deposits and lending, capital raising, even taxes, and many others.

Of course, financial institutions have always been using technology to make their businesses more efficient, more secure, and more global.

However, today’s fintech innovations are challenging and disrupting the entire nature of finance. They’re affecting and evolving how we buy products, pay bills, send money, receive funds, and invest, among others.

These innovations in technology have allowed companies to offer financial services outside of traditional banking. An example would be PayPal, where merchants can receive payments directly from customers anywhere in the world.

And then there’s those who use Bitcoin for ecommerce transactions. They’re participating in a global market, but using currency that’s independent of any government regulation.

PayPal and Bitcoin are just a couple of examples of how fintech is leaving banks out of the equation.

Fintech in the Past

As I mentioned, the use of technology in the financial sector isn’t really new.

Banks, insurance firms, and trading companies have used it to improve, automate, and expand their services. From the invention of credit cards and automated teller machines, to offering global fund transfers to electronic stock trading.

However, a significant shift in the world of fintech came during the 2008 global financial crisis. That’s the time when many financial professionals lost their jobs and people started to distrust banks and financial institutions.

It was when tech-savvy financial experts looked for ways to solve customer problems by finding solutions that eliminated traditional financial service providers. Technology was used to displace banks and the fintech of today emerged.

Fintech in the Present

Today’s fintech generally solves problems where traditional financial services have failed; or where customers are having a difficult time.

Payments and Deposits
For example, companies such as Coins.ph has made it possible for Filipinos to easily receive, send, and convert Bitcoin (as well as other cryptocurrencies).

Similarly, GCash, PayMaya, and other digital wallets (including Coins.ph) allow you to send and receive money from anyone; and do other stuff such as pay your bills.

And then, digital banks such as CIMB and ING offered Filipinos a way to deposit cheques with a snap of a picture on their phone. There’s no need to visit a bank anymore.

You don’t even have to go to the BIR or a bank to pay your taxes, thanks to Taxumo.com – a fintech startup founded by personal friends of mine.

How about borrowing money? A lot of local fintech are available for Pinoys today, most of them offer personal loans online or through a mobile app.

A friend was able to replace his broken refrigerator with a new one by financing it through Home Credit. Before, you’d need a credit card to buy an appliance with installment payments.

Trading and Investing
How about trading and investing? Outside traditional brokers offering online portals and mobile apps, we have fintech startup such as Investagrams that’s changing how Pinoys trade the stock market.

Or if you want to participate in global markets, you can create an account at eToro to trade and invest in cryptocurrencies, US stocks, global indices, exchange traded funds, and many others.

Plus, eToro has Social CopyTrading, which allows you to earn passive income from global markets by simply copying experts who actively trade and invest online.

Even financial education is being revolutionized by fintech. I’ve personally seen this in IMG Wealth Academy, where technology has made it possible for them to do their financial advocacy faster, easier, and with wider reach than in the past years.

A lot is really happening in fintech, both locally and globally, that it will be impossible to list and mention all the innovations here.

There’s still crowdfunding, comparative shopping sites, shared economy companies, and even artificial intelligence that can do financial analysis, among others.

How fintech can help you

Fintech has the ability to make your life easier. These innovative products and services provide a wide range of choices and opportunities that can surely help your personal finances.

Do you need business capital? Sign up for a crowdfunding site. Perhaps another source of income? Then check out a peer-to-peer lending company.

Planning to get a car or life insurance? Compare and find the best deal in an aggregator website. What about avoid carrying a lot of cash? Then go cashless with a digital wallet.

Do you want to invest or trade, but need some guideance? Then try social trading and learn from other successful investors and traders.

All these I mentioned are just some of the ways that I’ve used fintech in my life. And I’m excited to discover more innovations in the coming years. I hope you are too.

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  1. Great post. This article was both a history lesson and a bit of prophecy. We remembered what was, we reviewed the present and we looked ahead to what will be.

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