Fintech has been one of those industry buzzwords that has excited the financial industry for the last 6 or so years. If you are not sure what “fintech” means, I might assume you’ve gone off the grid a while because it has been pretty hard to avoid. Fundamentally, fintech stands for financial technology or any technology used to serve the emerging finance sector. That seems like a rather broad brush stroke though. More recently fintech has come to describe a segment of that industry that is using new technologies to drive innovation in traditional finance and those that serve financial services. Invigorating the old, established financial sector with a digital transformation is indeed exciting and a great opportunity for many.
Just today I performed a keyword search on “fintech” in our own NewsEdge business news database to get a sense of what is happening in fintech at the present. I received nearly 10K results and that is just for stories in the last week. For those of you thinking that fintech has already peaked, look again. Fintech looks poised for continued growth.
It was plainly obvious through our data visualization tools that fintech is playing a big role in compliance applications at the moment and “insurtech” is hot in the insurance industry (that’s right, fintech for the insurance industry). Yet that is not all. There are numerous, other areas that are benefiting from fintech advancements including: infrastructure, data analytics, investment management, lending, payment services and cryptocurrencies (such as bitcoin using blockchain technology). Think of how easy it is to make purchases from your mobile device today versus how you shopped 5 years ago. Mobile wallets such as Apple Pay and Android Pay are used in millions of brick and mortar locations throughout the US and even more online. In this example it’s easy to see how fintech has changed the way we make purchases.
Of course all of these advancements are not without concerns of their own. The sheer speed at which startups began introducing ideas and big companies began funding their own development has been pretty amazing. The biggest concern at the moment seems to be fintech regulation. While there seems to be a collective agreement that some oversight is necessary, many worry that too much regulation or the process to adhere to such regulation could slow down growth and discourage development. The interim seems to be a mandate of “responsible innovation”. The idea here is to give companies enough wiggle room to create, develop and disrupt the norms in an effort to fulfill the evolving needs of the financial services while operating in a fair and responsible manner toward business and consumer alike. There is no refuting that we have entered new territory and it is very exciting.