Finance and technology conceptual illustration.Fintech, despite what it sounds like, is not a high-tech update for sharks. Like many buzzwords in our short-cut-happy society, it is the ramming together of two words: financial technology.

Fintech is a catch-all shorthand for using technology connectivity to make banking and investing more efficient and direct. Fintech falls into two realms: 1) companies that offer digital tools to customers for everything from borrowing money to financing start-ups and 2) companies that help financial institutions manage their operations.

So where might this be felt?

  • Peer-to-peer lenders shorten the loan waiting time, cutting out banks.
  • Robo-advisers manage portfolios according to preset risk levels, cutting out investment banks.
  • Institutions experiment with digital methods of transmitting currencies and assets, cutting out back-office jobs.

On the other side of the scale, venture capital firms are betting big on fintech startups, investing money in operations that could both take away bank business and make banking more efficient and profitable.

It seems fairly certain that technology will disrupt financial services, just as it has with so many other industries. However, banks and other financial institutions are trying to get out in front of fintech with their own products before it takes a bite out of their profits.

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