With all of the new terms milling about in the technology, finance and business sectors, it can be challenging to keep up with the latest innovations and how they can affect you. These terms include data science and fintech, which are related but very different. For example, data science is an interdisciplinary field that uses data to understand and predict complex systems, while fintech is a toolbox of technology used in the finance industry.
What Is Fintech?
Fintech, or financial technology, is the application of technological innovations in the finance industry. The term can also refer to the businesses, such as Cane Bay Partners St. Croix, which design and make the technology used for products and services in that industry. While this can sometimes be a nebulous term that could include everything from a keyboard to a marketing AI, it usually refers to the new technology or tech being used in new ways. For instance, data science is not necessarily fintech in and of itself, but data science tools used to generate financial reports are. Other technologies included in fintech are predictive analytics, AI and machine learning.
What Is Data Science?
Data science is a field that uses algorithms, scientific methods, systems and processes to gather, clean, sort, and extrapolate data to understand complex systems better. You can use data science in nearly every industry for a seemingly unending number of applications. For example, many car insurance companies use data science to create a clean data set of accidents involving drivers with their policies, a particular demographic, or a specific location. Those companies can then use data analysis tools to extrapolate reports predicting how much they can expect to pay out in claims for the following year. This type of data analytics can be used to track sales, predict the markets and much more.
What Are Some Key Differences?
Data science and fintech overlap in that the tools, tricks and techniques used in the collection and analysis of data can be applied to financial data sets. For instance, once the data has been collected and analyzed, machine learning and AI can use the data set with predictive analytics to predict future trends based on past patterns with little to no human input. Fintech incorporates multiple disciplines besides data science, and data science can be used in nearly any industry. In other words, data science is one of the many tech fields used in fintech and by fintech companies.
Knowing how seemingly confusing terms can interact in the world of technology and business can go a long way toward increasing your understanding of the finance industry, applications of technology and interdisciplinary innovations of tech and finance. For instance, knowing that data science is one of the tools used in fintech and that fintech is finance technology, you can better understand how financial predictions and reports are generated. This can also help you determine which investments are beneficial and too risky for your needs or understand if your investment manager is doing a good job.