6 Fintech Innovations That Will Change Your Life

You’ve encountered chatbots and online banking, but these tools only scratch the surface of what Fintech has already accomplished. Sitting at the cross-section of finance and technology, the field offers innovations beyond what was once thought possible. Today, it’s transforming the very way businesses and individuals earn, spend, and make decisions about their money.

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Just how is Fintech changing the world? Here’s a look at 6 important innovations that have emerged as standouts in the sector.

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What Is Fintech?

Fintech is literally a combination of the words finance and technology. And that’s exactly what it means — technology applied to the financial world. These innovations deliver financial services to consumers in an accessible, easy-to-use way, making everything from banking to investing much more practical for everyone.

Fintech has changed the entire world of money and could alter the way we spend, accept payments, and even think of currency.

6 Groundbreaking Fintech Innovations

These are just a handful of what Fintech has brought us.

1. Robo-Advisors

Financial advisors are extremely helpful in guiding your investment strategies and activities, but unfortunately, they often come at a steep price that not everyone can afford. Enter Robo-advisors. Powered by artificial intelligence (AI), this technology can identify patterns and provide advice just as good as — if not better than — its human counterparts.

Robo-advisors are also more accessible to people across the economic spectrum and within reach of many typically underserved populations, making them all the more valuable.

2. Peer-to-Peer Lending

The peer-to-peer (P2P) lending model cuts out the middleman — generally the bank — and makes transactions between two entities faster and easier. Not only is it a more efficient method of exchanging money, but it’s also cheaper for both parties, reducing the overall cost and fees associated with the process.

Today, there are plenty of sites, such as LendingClub, that allow you to compare rates, terms, credit score thresholds, and more, drawing investors and borrowers alike.

3. Digital Banking

Digital banking isn’t limited to simply checking your accounts and transactions online. Now, there are a multitude of services under the umbrella term, including opening an account online and depositing checks and other funds into your account. You can perform practically any service you can do at the bank’s facility — and then some. There are many advantages to this type of banking, including lower fees.

Now, there are some digital-only banks that have no brick-and-mortar locations or many fewer facilities than traditional banks with very limited in-person services. Examples include Charles Schwab and Ally.

4. Payment Gateway

E-commerce applications, another exciting Fintech innovation, make it possible for customers to pay for products in a variety of contexts, from physical storefronts to online services to vendor booths at conferences. The encrypted payment gateway processes credit-card or direct payments securely.

This transaction method has become enormously popular thanks to tools like PayPal, Square, and Stripe.

5. Cryptocurrency

Where does one even start when broaching the world of cryptocurrency? When Bitcoin entered the scene in 2009, it was poised to change the very nature of currency and money itself. Now, other cryptocurrencies have gained traction as well, although the very name cryptocurrency has become more or less synonymous with Bitcoin.

Cryptocurrency facilitates peer-to-peer transactions with no central authority, like a bank, governing them. Using blockchain, in which transactions are recorded on a series of encrypted “blocks” connected together in a “chain,” cryptocurrency enables efficient, ultra-quick electronic monetary transactions to take place.

Will cryptocurrency make traditional currency obsolete? As of yet, it’s not regulated by governments which makes it less trustworthy to many— plus, its value can fluctuate drastically. However, some of the world’s biggest companies, including Microsoft, are now accepting it, lending some credibility to this Fintech innovation.

6. Digital Wallet

Physical wallets are often overstuffed, clunky objects that we’re constantly forgetting to bring with us. Digital wallets in no way resemble their physical counterparts — in fact, they make things more convenient.

Using your digital wallet, you can store information, such as passwords to different accounts, payment information, e-coupons, and more. You can connect it to your bank account and store other important data, such as your health insurance and driver’s license information, to enable easy access. They’re also used for transactions made with cryptocurrency.

You’re probably familiar with some of the biggest names in digital wallets: Apple Pay, Android Pay, Alipay, Microsoft Wallet, and many others. These make it possible for you to leave your physical wallet and credit cards at home and simply use your wallet to make payments, whether you’re shopping online or in a store.

What’s next for Fintech? Given the abundance of innovations the sector has given us already, it’s clear that the intersection of finance and technology has a bright future ahead and will continue to make our lives easier.