Friday, 9 February 2018

What Is Fintech And How Will It Shape the Future of Banking?

Fintech is the innovation that seems to break down the barrier of the future in the finance field. Lionel Barber, Financial Times editor, said that “Nobody wants to be in banking, everyone wants to be in fintech”. Many call Fintech the Fourth Industrial Revolution, which emerged from the modern entrepreneur’s desire to adapt to his new needs, and experts describe it as the missing link between financial traditionalism and the finances of the future. The complexity and innovation of Fintech are the main ingredients that the citizen of the future needs, a mix between the Internet of Things and artificial intelligence and a sort of riot against the outdated, restricting finance systems that many had already resigned to using. Fintech’s rise to power forced traditional systems to adapt and offer new ingenious solutions to customers and startups. These solutions are meant to streamline their work and facilitate interaction between those who activate in the finance field. But what exactly is Fintech and how can we expect it to change the future of banking as we know it?

First, a bit of history
In general, banks and the finance field as a whole have been relatively quick to adopt new technologies and upgrade the services they provided to their clients. However, all of this changed in 2008, when the economic crisis struck and many institutions had to close down or dramatically change their portfolios to adapt to the new, stringent requirements of the market. They had to comply with new regulations, pay fines, impose stricter loan criteria to survive, being under constant stress. Adapting to those hard times favored their survival, but it did not drive innovation.

In the same period, technology was having an unprecedented boom. Lifechanging apps, services and products were released, such as the iPhone, booking apps, Airbnb, ridesharing apps, chat apps, cryptocurrencies or mobile payment systems. PayPal’s popularity grew and people had smarter options for everyday necessities. Mostly made up of millennials, that generation favored change, and by the time banks got back on their feet, there was already a considerable gap between the technologies offered by traditional banks and the rising standards of modern customers. They demanded more flexibility, convenience and a streamlined user experience – and Fintech was there to meet these standards.

Full story at The Future of Things.

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