FinTech: its emergence, percolation and impact on global economy
FinTech is driving the financial service sectors from banking, investment and retail to education and even crypto-currencies today. The term is derived by combining two words: Finance and Technology. Its relevance can be found in most business transactions, from digital money to double-entry bookkeeping. In simple terms, FinTech provides several apps, sites and services, which are designed to help consumers pay for goods, get loans and manage their accounts.
FinTech – its rise in prominence
What has fueled the gradual upsurge? FinTech‘s growth quotient can be correlated with the rise in Big Data and Internet of Things (IoT). Did you know that out of the 2.4 quintillion megabytes data generated in the last decade, 90% of it emerged in the last two years itself? We are surrounded by data points in all walks of our life, from the devices we access to the services we cater to, to everything in between. This phenomenon has forced institutions to revisit their structures and make space for automation. The FinTech wave has gone past its primary strongholds – banking and finance – and penetrated across all industry verticals. This is exactly makes FinTech an undeniable force.
Earlier, Financial Technology was applied only for the back-end of established and trade financial institutions. With the mobile internet boom, however, FinTech has come to include many technological innovations in personal and commercial finance, providing the ease in the daily transactions for all consumers at large. Almost all FinTech products and services which relied on its branches, salesmen and personal computers are now embracing tech-driven solutions as the new way of life. And why not, after all, they are easy to access and use, and act as ‘perfect assistants’ in helping customer’s make financial decisions. FinTech incorporates many new technologies like machine learning, predictive behavioral analytics and data-driven marketing, which track and analyze the user’s transaction or investment activities and read the current market data to suggest the next move to them.
Where FinTech stands now
As of now, FinTech has become a multi-billion dollar market, with many startups in verticals ranging from stock brokerage, loan and cryptocurrency to healthcare, insurance, digital transaction services and cyber security, jumping on the bandwagon. Some of the innovations that FinTech made popular are seamless digital onboarding, rapid loan approvals and free person-to-person payments.
Future of FinTech
Putting these innovations in perspective, it is safe to say that FinTech‘s future developments will certainly prove disruptive yet constructive. For example, we can already see that e-shopping is growing exponentially, and economies are going cashless. Like the retail sectors, trading platforms and insurance products are luring their consumers to use their data driven tech for making better decisions. Clearly, there is a gradual shift of power from the banking and financial sectors to the organizations which can provide customer services. On the contrary, banking firms have challenged the FinTech firms by becoming technology providers. They utilize PayPal or Square or sometimes, collaborate with shared platforms to enable services. For instance, Early Warning Services – a technology provider owned by Bank of America, BB&T, Capital One, JPMorgan Chase and Wells Fargo – launched the all-new “Zelle”, a person-to-person payments service. The technology, supported by 30 banks, will provide a platform to almost 86 million U.S. mobile banking customers to send and receive payments. Developments like these will help transform markets faster and help bring economic parity.
FinTech have ushered in a new age that can help institutions achieve their monetary and non-monetary goals with greater clarity. The future will reveal whether they can do more good than harm.