Eugene Plotkin Breaks It Down: What Even Is Fintech Anyway?

Eugene Plotkin, Fintech CEO and former investment banker.

TechWallet CEO Eugene Plotkin Explains the Fintech Phenomenon

Fintech is a word that pops up everywhere nowadays and seems to have a million definitions. To better understand what experts say when they reference fintech, we talked with financial tech consultant and former investment banker Eugene Plotkin, who helped us get to the bottom of the buzzword. 

“Fintech is a vitally important concept because it increasingly governs how global commerce operates,” Plotkin says. “It’s a shorthand way of saying ‘financial technology’ and it refers to applications or software that make monetary transactions or data easier, faster, or more secure.” 

Every time you swipe a credit card, check your balance from your phone, or get money from an ATM, you’re using fintech, Plotkin explains. 

“The COVID-19 pandemic has shown again how necessary fintech applications have become,” he says. “Thanks to online shopping, contactless payments, and mobile food-delivery apps, the lockdowns that so many people experienced were not as bad or inconvenient as they would have been just a few years ago.” 

Moving Money Faster

One of the biggest advantages fintech presents is streamlining traditional financial services. Today, consumers and businesses want things to happen quickly. 

Operations that used to take days or weeks, such as receiving a credit report or sending money overseas, can now occur in minutes or seconds, thanks to fintech software that rapidly verifies and conducts transactions. 

Through high-speed connection, fintech has removed many of the obstacles that kept the pace of financial transactions at a crawl. Instead of taking checks to the bank for a deposit, people and businesses now instantly transfer money to each other. 

Financial giants also benefit from fintech’s rapid transactions, Plotkin says. 

“No regular consumer thinks of banks as being especially efficient. They have inconvenient operating hours and sporadic holiday closings,” he said. “But fintech has brought considerable momentum to the financial sector. These days, banks use fintech applications to process claims faster, gain clearer insights into consumer behavior, and make better investments.” 

Creating New Opportunities

Plotkin points out fintech has empowered small businesses by allowing millions of people to launch their own ventures with ease. 

Apps like Square have made it simple for anyone, from craft vendors to house cleaners, to accept digital payments, while accounting software like Quicken helps mom-and-pop stores maintain accurate records, he notes. 

Fintech is also behind what we’re seeing happening with the stock market,” he adds. “It used to be that stockbrokers were these important people in New York who had special access and knowledge. But now anybody can make trades directly from their cellphones. And many people are doing just as good a job at picking and choosing winning investments.”

He lists other advances, such as the rise of robo-advisers, which are increasingly replacing traditional financial consultants by using complex algorithms to suggest investment strategies and provide individualized financial advice to consumers at a fraction of the cost. 

Fintech is also opening new doors for unbanked people and those in places underserved by traditional financial institutions. Today’s apps don’t require a credit history or a minimum balance, allowing millions more people access to accounts. 

“Cybersecurity is another area of fintech that’s become increasingly important. It may not be as consumer-facing as some other aspects, but it’s arguably even more important,” Plotkin observes. “Many of the advances that traditional financial institutions are now making in fintech concern how to encrypt and protect their assets from digital thieves and hackers bent on stealing credit card numbers, digital bank balances, and personal information.”

What’s in a Name? 

The ubiquity of the term “fintech” also reveals a deeper truth about its uses. 

Today, nearly every industry has been affected by technology disruptions, but you never hear coinages like “autotech” or “foodtech.” 

Plotkin explains that’s because fintech doesn’t merely improve financial institutions; it creates entirely new market sectors. 

“I like to ask people a simple question: Do you think PayPal is a financial company or a technology company?” he poses. “The answer, of course, is that it’s both. That’s why fintech is special. Tesla has created innovative concepts in transportation, but it’s still a car company.”

Fintech has led to entire concepts that were unthinkable just a few years ago, he adds. Cryptocurrency, a digital form of money not tied to any nation’s ability to pay, couldn’t happen without fintech. And it only started in 2008, 20 years after PayPal launched. 

The Tech Behind the Finance

While fintech can officially be traced to a time before ATMs were invented, Plotkin is quick to point out that most people aren’t referring to old technology when they bring up fintech in conversation. 

“Really, fintech refers to advanced technology used in financial services,” he says. “When people mention fintech, they’re discussing ideas like machine learning, blockchain, cloud computing, or big data.”

Plotkin says it’s not necessary to understand these technologies to recognize fintech or benefit from it.He notes that one of the major advantages of fintech is how its products are helping to spread financial literacy. 

“When companies launch apps that help consumers do new things, like invest in commodities, they also have to ensure that these products can be easily understood,” he says. “The result of that is that many more people will have access to more information about how their money can work for them.”

What’s Next for Fintech

Plotkin says that the term fintech isn’t going away any time soon, even though it seems to encompass an increasingly large set of ideas and products. 

“As long as people will pay for greater convenience, safer experiences, and access to more non-traditional financial services, the sector will continue to evolve to meet those needs,” he says. “We’re already seeing how new ideas, like wearable technology and non-fungible tokens (NFTs), are changing things right now in ways that we can’t predict.”

The next step of fintech is exciting and unpredictable. But no matter what happens, understanding its core elements will help you better navigate the future, Plotkin adds. 

Article Editor

Pamela is a television journalist, humor writer and novelist. Her first novel, Allegedly, was released in 2015 by St. Martin’s Press. The book is available on Amazon and Barnes & Noble. She and her husband, Daniel, have a 3-year-old son, Carter.

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