FinTech (financial technology) is a catch-all term.
FinTech (financial technology) is a catch-all term referring to software, mobile applications, and other technologies created to improve and automate traditional forms of finance for businesses and consumers alike. FinTech can include everything from straightforward mobile payment apps to complex blockchain networks housing encrypted transactions.
This guide will discuss the various types of fintech, the skills needed to work in the field, and the job outlook for several fintech careers. We’ll also take a closer look at a few practical ways to learn essential industry skills, such as an immersive online fintech Bootcamp — an excellent way for aspiring fintech professionals to get hands-on experience.
FinTech 101: Understanding the Basics
A Simple Definition of FinTech
The term “fintech company” describes any business that uses technology to modify, enhance, or automate financial services for businesses or consumers. Some examples include mobile banking, peer-to-peer payment services (e.g., Venmo, CashApp), automated portfolio managers (e.g., Wealthfront, Betterment), or trading platforms such as Robinhood. It can also apply to the development and trading of cryptocurrencies (e.g., Bitcoin, Dogecoin, Ether).
A Brief History of FinTech
While fintech seems like a recent series of technological breakthroughs, the basic concept has existed for some time. Early credit cards in the 1950s generally represent the first fintech products available to the public. They eliminated the need for consumers to carry physical currency in their day-to-day lives. From there, fintech evolved to include bank mainframes and online stock trading services. In 1998, PayPal was founded, representing one of the first fintech companies to operate primarily on the internet — a breakthrough further revolutionized by mobile technology, social media, and data encryption. This fintech revolution has led to the mobile payment apps, blockchain networks, and social media-housed payment options we regularly use today.
How Does FinTech Work?
While fintech is a multifaceted concept, it’s possible to gain a firm understanding. FinTech simplifies financial transactions for consumers or businesses, making them more accessible and affordable. It can also apply to companies and services utilizing AI, big data, and encrypted blockchain technology to facilitate highly secure transactions amongst an internal network.
Fintech strives to streamline the transaction process, eliminating potentially unnecessary steps for all involved parties. For example, a mobile service like Venmo or CashApp allows you to pay other people at any time of day, sending funds directly to their desired bank account. However, if you paid instead with cash or a check, the recipient would have to travel to the bank to deposit the money.
FinTech Trends for 2022
Over the years, fintech has grown and changed in response to developments in the broader technology sector. In 2022, this growth is defined by several prevailing trends:
- Digital banking continues to grow: Digital banking is more accessible to access than ever before. Many consumers already manage their money, request and pay loans, and purchase insurance through digital-first banks. This simplicity and convenience will likely drive additional growth in this sector, with the global digital banking platform market expected to grow at a compound annual growth rate (CAGR) of 11.5 percent by 2026.
- Blockchain: Blockchain technology allows for decentralized transactions without involving a government entity or other third-party organization. Blockchain technology and applications have been proliferating for years, and 2022 is likely to continue this trend as more industries turn to advanced data encryption.
- Artificial Intelligence (AI) and Machine Learning (ML): AI and ML technologies have changed how fintech companies scale, redefining their clients’ services. AI and ML can reduce operational costs, increase client value, and detect fraud. As these technologies become more affordable and accessible, expect them to play an increasingly significant role in fintech’s continued evolution — especially as more brick-and-mortar banks go digital.
The Technologies That Power FinTech
Modern fintech is primarily driven by AI, big data, and blockchain technology — all of which have completely redefined how companies transfer, store, and protect the digital currency. Specifically, AI can provide valuable insights into businesses’ consumer behavior and spending habits, allowing them to understand their customers better. Big data analytics can help companies predict changes in the market and create new, data-driven business strategies. Blockchain, a newer technology within finance, allows for decentralized transactions without inputs from a third party, tapping a network of blockchain participants to oversee potential changes or additions to encrypted data.
How Safe is FinTech?
FinTech companies are generally trusted by consumers — according to Forbes, 68% of people are willing to use financial tools developed by non-traditional (e.g., non-financial, non-banking) institutions. However, many fintech applications are relatively new and are currently not subject to the same safety regulations as banks. This doesn’t mean that consumers shouldn’t trust fintech companies with their money — it just means that being careful can be beneficial. The benefits of working with a fintech company for most consumers outweigh the perceived risks.
FinTech has revolutionized financial institutions for millions of people across the globe, changing how we pay each other, buy stocks and other financial instruments, and access financial advice. Many different fintech companies are offering unique services for their clients. Here are a few prominent examples:
Robinhood (Stock Trading)
Robinhood is one of many apps that facilitates digital stock trading, distilling the traditional broker-client relationship into an easily accessed online interaction. Robinhood’s founders saw that most investment platforms charged high fees to their customers, even though executing trades doesn’t cost much. In response, the company launched its fee-free trading platform, allowing smartphone users to trade stocks more freely. The service offers commission-free stock trading and exchange-traded funds; it has also recently started offering cryptocurrency trading for its users.
Venmo (P2P Payments)
Klarna (E-Commerce)
Wealthfront (Wealth Management)
Square (Business Payments)
How to Learn FinTech (and the Five Skills You Need)
FinTech is a growing field offering various job opportunities for those with relevant experience. Are you interested in a career in fintech? Here are a few pathways for learning key industry fundamentals — plus several key skills to hone immediately.
Educational Pathways in FinTech
FinTech Boot Camps
FinTech boot camps provide a space for students to get started quickly in fintech. Boot camps provide structured learning opportunities and hands-on experience for students interested in the field. Boot camps are both personalized and intensive — they offer thorough curricula simulating real-world experiences, but they often can be pursued remotely in a schedule-friendly manner. Columbia Engineering FinTech Boot Camp, for example, provides a base for anyone wanting to get started in fintech within just 24 weeks, including flexible modules covering everything from financial analysis to algorithmic trading and blockchain transactions.
Degrees With a Focus on FinTech
When it comes to traditional degrees, more colleges are offering degrees focusing on fintech as the field grows. These programs allow students to learn the specifics of a conventional finance major while developing the technical skills that may be potentially valuable in fintech. These programs typically take 2-4 years to complete, depending on the degree program and how many classes a student can take at once.
Self-Taught FinTech Options
Many resources are available for those wanting to learn fintech, including free online courses, educational multimedia and apps, and digital guides. Self-teaching options are ideal for those favoring a fully autonomous learning structure, offering the chance to learn industry basics and personal organization and time management skills.
Key FinTech Skills
Programming:
Many fintech entities use mobile applications or websites to broaden their reach and increase consumer value. Programmers and software developers are primarily responsible for building and maintaining these fintech sites and applications, designing them to be secure, efficient, and navigable. Popular fintech programming languages include Java, C++, Python, and Ruby.
CyberSecurity:
Most modern fintech companies are data-driven and often connected to vast digital networks that deliver users’ new experiences and possibilities. This framework provides a great deal of value but can also increase the risk of cyberattacks and security breaches. Therefore, aspiring fintech professionals can benefit from a working knowledge of cybersecurity, studying how it is used to protect fintech companies from hackers and other cyber threats.
AI/ML and Data Science:
Today’s fintech users generate quite a lot of data, and many fintech companies use this data to personalize their services and deliver additional value. Big data can make financial predictions based on client behavior, manage finances for clients, and lead to critical insights that enable more vigorous, more informed decision-making. For this reason, ambitious fintech professionals will want a basic understanding of data analysis, as it will likely play a role in their long-term careers.
Specifically, artificial intelligence (AI) and machine learning (ML) algorithms are regularly used to process and analyze large amounts of data; in doing so, they allow companies to generate actionable insights. AI/ML algorithms can lower risk, increase returns, automate processes, and make predictions for the future — and as a result, they stand as a valuable data-oriented skill for anyone wanting to work in fintech.
FinTech Careers, Job Outlook and Salaries
FinTech has spawned a growing range of job opportunities for those interested in the field. Here is a quick overview of a few such careers:
Financial Analyst
Financial analysts help businesses make decisions that can lead to stronger future returns. They employ high-level critical thinking to assess the performance of stocks, bonds, and other financial instruments. Currently, job prospects for financial analysts are strong. According to the Bureau of Labor Statistics (BLS), the field is expected to grow by 5 percent by 2029, and the median pay for a financial analyst was $83,660 in 2020.
Information Security Analyst
Information security analysts plan and execute security initiatives to protect computer systems and data from unauthorized access — a must for today’s fintech companies. Job prospects for information security analysts are solid. According to the BLS, the job outlook for information security analysts is expected to grow by 31 percent by 2029, which is significantly faster than the average for all industry occupations. The median pay for information security analysts in 2020 was $103,590, much higher than the national average.
Blockchain Engineers
Blockchain companies and applications are a growing part of the fintech ecosystem. Blockchain engineers design, build, and maintain decentralized blockchain applications like cryptocurrency exchanges, lending applications, and voting platforms. According to CareerOnestop, the median salary for a blockchain engineer in 2020 was $92,870, and the number of jobs in the field is expected to grow by 6 percent by 2029.