From advancements in book-keeping to the development of cryptocurrency and digital cash, financial technology (fintech) is all around us. We’ve already defined Financial Technology (FinTech) and its benefits, it has now become a broad term, applying to a diverse range of activities. Fintech refers to the incorporation of technology into the offerings by financial services companies to improve their use and delivery to consumers. Thus, as the name suggests, fintech is an integration of finance and technology, aimed at revolutionizing the traditional ways and making it Fintech: Future of Financial Services.

FinTech Examples:

One example of fintech would be the introduction of mobile wallets like JazzCash in Pakistan, which makes it possible to make payments online without having to go physically to a bank and going through a time-consuming, human interaction-based process. Another great example of fintech is Robo Advising, which makes it possible for people to invest in portfolios without having to bear the expenses of a financial analyst. Robo Advisers, a class of financial advisers, provide digital financial advice based on algorithms while minimizing human interaction. They suggest the portfolios that a user should invest in based on specific mathematical formulations. Their ease of entry, low cost, and ease of use make them particularly attractive amongst entry-level investors.

FinTech Startups:

The most popular fintech startups are the one which challenges the conventional ways of providing financial services by making offerings which are less cumbersome and more efficient in their delivery to the consumers. This is achieved by using technology in the provision of these services, which not only increases the speed of delivering them but also cuts down the costs associated with providing those services such as is the case with Robo Advising.

Talking about the fintech landscape, most of the fintech startups originate in North America, while Asia being the second-largest producer of these fintech startups. The users of fintech can broadly have four main categories:

1) B2B for banks and

2) their business clients

3) B2C for small businesses

4) consumers.

The recent Coronavirus pandemic, also known as COVID-19, which has taken the whole world aback, appears to amplify the need for fintech. With people stuck in their homes, avoiding human contact, and going outside, the use of technologies such as fintech, which allow people to work remotely with minimum to no social interaction, seems to have spiked. It would not be wrong to say that coronavirus may act as a catalyst for fintech.

Fintech: Future of Financial Services

Like any other technology, fintech also faces regulations. Financial services are one of the most regulated segments throughout the world. The incorporation of technology into financial services has raised various concerns, and these concerns have, inevitably, called for tighter regulations. One such concern is hacking – whereby one individual or a group of individuals, using their technical expertise, breach into another individual’s or group’s system or computer to gain unauthorized access to data. An instance of this is the hitting of the world’s third-largest fintech, Finastra, by ransomware as per the statement released by the company on 20th March 2020.
So, what exactly we expect from fintech in the future? Well, it is reasonable to believe that the traditional monopoly of banks appears to be short-lived as people start getting used to tapping their way to making every payment, transferring funds, seeking financial advice, etcetera. Digital payments are gaining popularity amongst users because of the ease they offer. It is also reasonable to expect that institutions that do not incorporate technology into their operations will be falling behind, as a higher number of consumers start prioritizing their ease and comfort at the expense of the conventional ways of doing things.