Global investment in financial technology (FinTech) ventures tripled to $12.21 billion in 2014, to over $27 Billion expected in 2018, clearly signifying that the digital revolution has arrived in the financial services sector.
Fintech (Financial Technology) is the convergence of Information Technology (IT) and Financial Services. Examples include mobile payments, cybersecurity, trading analytics and the list goes on. Additionally, it is a commixture of financial technology and is paving the way for new efficiencies and innovation within the world of finance. There are several factors that help explain FinTech’s emergence as a growth sector, including technology such as social networks, a favourable regulatory environment and demographics. These factors may gave FinTech options an increasing advantage over traditional financial services.
FinTech has a large scope and varies from payment systems, to loans, to accounting software. Many smaller financial tech companies are taking on big banks and challenging the status quo for payments, banking method and financial services. Here are a few examples of how FinTech is changing the financial landscape around the world.
- Qudian: Started in 2014, Qudian is a provider of online small consumer credit in China. They take advantage of big data and innovative technologies such as AI and machine learning to make data-driven decisions, and make personalized credit or microloans more accessible. They target young, mobile active Chinese consumers that may not qualify or be in a position to take a loan from a traditional bank. The CEO Luo Min believes the online-only ability coupled with the latest technology and data analytics can bridge some of the inefficiencies of big banks. The difference between Qudian and a predatory lender is the flexible micropayment terms they offer.
- ClearBank: Founded by entrepreneur Nick Ogden, is a “bank for banks.” It will not offer any services to consumers. They offer payment processing and core banking services to fintech startups, credit unions, societies and other “challenger banks.” It is built using Microsoft’s Azure cloud, and claims it can offer cheaper and faster clearing services to small financial firms that need access to these payment systems.
- Apple Pay: The technology behind Apple Pay, linking your credit card or debit card to your Apple Smartphone or Watch to pay for goods may be the most widely used in everyday life. The Near Field Communication (NFC) is the technology behind Apple pay which allows your device to communicate with other devices containing an NFC tag.
- Ayden: The all in one payment platform is a one-size-fits-all” for payments such as Apple Pay, Spotify and Uber. The technology is behind most mobile and online payment pages as well.
- All “Big 5” accounting firms now use financial technology in their operations. Accountants especially are at risk because quite frankly, an AI accounting system could replace an accountant and cut salary costs dramatically.
Financial technology is already all around us. Whether it’s behind the scenes in banking operations, acquiring loans or paying for groceries, fintech is only getting more diverse and applicable to the world around us, learning how to use and integrate with it will be important going forward.
How can we leverage financial technology to address one or more global goals, and solve a global problem?
Find out more at the FinTech Canada Conference in Toronto on August 16, 2018.