Financial technology refers to the use of innovative tools to improve monetary transactions, and is reshaping the financial sector. This includes everything from new payment methods to advanced investment strategies. The emergence of these technologies is helping to expand financial inclusion and reduce costs.

In its most basic form, fintech is the use of digital technologies to enhance existing monetary services. However, its true impact lies in its ability to create entirely new businesses that challenge traditional banking and investment firms. Examples of this include robo-advisors, cryptocurrency, payment apps and peer-to-peer lending platforms.

Some of these companies may even go on to disrupt the entire industry. The most well-known example is Paypal, which was created in 1998 and now handles a majority of online payments. Another company making waves is Affirm, which allows shoppers to make immediate purchases using financing that is tied to their credit scores. These types of innovations have allowed these new financial services providers to gain traction because they can offer customers more convenient and transparent options.

In the long run, it is clear that leveraging fintech innovation will continue to shape the future of the global financial industry. It is estimated that the global fintech market will grow at three times the rate of the overall banking industry between 2022 and 2028. In order to remain competitive, traditional banking and investment firms must embrace fintech and integrate it into their offerings. This can be achieved by either developing in-house solutions or partnering with fintech companies that can help them meet the needs of their target markets.