In the previous years, the internet has been the focus of developments in the financial industry. In banking per se, ATMs, mobile banking, and online money transfers were already significant steps towards automation during the time they were rolled out – but no one saw this new giant coming.
In developing countries, more than half of the digitally-active population uses at least one of the many fintech products. According to a recent report, sources of funding for fintech startups have spurred by 40% every year. In another survey, 84% of worldwide consumers admit to being aware of fintech. Without a doubt, fintech is the financial industry’s new giant, a disruptor that was not predicted until it was right at every financial institution’s doorstep.
What Is Fintech?
Fintech is a play on words combining finance and technology and thus, speaks for its meaning. It has the ultimate goal of making financial services more efficient to keep up with the ever-changing financial needs of consumers. Because of its heavy reliance on software systems, it challenges current financial institutions which employ traditional legacy systems and manual internal business processes.
What Are Examples Of Fintech Innovations?
- Electronic Payments
Traditional over-the-counter payments are undoubtedly tiring and time-consuming, but with the advent of mobile payment applications, bills payment becomes as seamless as it can be. What’s more exciting is that sooner or later, inter-bank and inter-currency payments can also be offered.
Compared to the current central banking process, virtual currency provides a decentralized digital currency which encrypts information for protection. It acts as electronic cash which allows online payments to be transferred without passing through a bank or other financial institution.
Previously, when people apply for insurance policies, analysts take the time to evaluate prospective customers manually. While these Know-Your-Client procedures remain essential, telematics can help streamline the process. As an example, insurance premiums for vehicles can readily be determined through devices which track how a person drives.
People have been using robot-advisors to seek the help of wealth management companies to aid them with their finances. Through robo-advisors, fintech companies have found cost-efficient ways to handle large volumes of investors who need assistance in their investment plans.
Strict regulatory requirements characterize the financial services industry because the nature of economic work involves the attainment, keeping, and protection of public trust and confidence. Regulatory technology aids financial institutions in their compliance with financial regulations such as those relating to Anti-Money Laundering.
What Is Fintech’s Impact on Human Jobs?
The most common worry that people have when it comes to fintech is that the increased automation and use of technology may soon replace the need for human work. However, such is not necessarily the case.
- People remain irreplaceable even in the midst of a highly electronic business environment. Soft skills remain at the forefront of the necessary skills of a business professional across all industries, and fintech is not an exception here. Every innovation requires constant monitoring to be successful.
- While there could be job cuts in traditional institutions, opportunities are open in fintech startups. The advent of fintech could then usher in a rebalancing of the job market, with a stark movement towards digital companies as against traditional ones. The best way then for a company to survive is to innovate.
- The rise of a brand new industry requires a new set of technical skills which are leaning towards information technology. It provides an excellent match for the millennial generation, which would soon comprise the sizeable portion of the world’s population, as they are the ones who are very inclined to do IT work.
Moving forward, artificial intelligence, machine learning, and big data are all becoming the core focus of fintech companies as they continue to look for more efficient ways to do financial services. At this point, we can just sit back and see how much more this disruptive, yet transformative and innovative giant will move the financial services industry to unleash its full agile potential.