There was a time when the word ‘fintech’ may have been a clever play on words in a futuristic Sci-Fi film, but today the term is a real, elaborate concept that has blown the gates wide open for a new world of finance technology. Fintech has become a star in investment, and it continues to broaden the opportunities for banking and finances, regularly transforming these sectors and presenting new information for individuals and businesses. Fintech is a field; it can range from a single product to a series of companies. It simply applies technology to the existing field of finance. The former has known rapid growth over the past two decades; technology runs the world today. It is an ever-evolving aspect of humanity today, and alongside it, human activity evolves. Financial tech takes part in the credit of transforming our world from the Industrial Age to the Information Age. A flower just in bloom, the field is now starting to unleash its powers.
Fintech presents the argument that there is a ‘better way.’ Not only does it open opportunity windows in investment for those companies that work in finance, but also for customers, entrepreneurs and investors as well. As it continues to grow exponentially, companies in fintech have great potential, regardless of their current size. This is due to the fact that finance is a part of human practices–it is present in every business. As a result, it can be practiced broadly, even in fields like agriculture and medicine, providing necessary data and driving profit. According to Innovate Finance, global venture capital investment in fintech reached US $36.6 billion, a 148 percent increase from 2017, and 329 percent over five years. In similar fashion, fintech fundings saw a 40% increase between 2018 and 2019. This steady ascent translates into strength for the sector, as it implements the complexity of financial services to its advantage. It therefore allows investors to monitor trends and user behaviors, making way for better-informed decisions to be made, and as a result driving success in cash flows, risk mitigation and financial transactions.
SIGN UP FOR ALERTS
The use of fintech stretches across various sectors including payments, retail banking and asset management. However, the previously-mentioned growth and the ever-changing trends in markets continue to contribute new sub-sectors in fintech. The real-life magic, technology, enters any domain to amp up the speed, accuracy and efficiency of its processes. The same was done for finance, bringing out sub-sectors of fintech in insurance and risk management, among others. Fintech’s existence in retail banking and customer finance has spawned Neobanks, financial technology firms that offer exclusively internet-backed financial services, and exist virtually for the most part.
For corporate banking, innovation was welcomed incrementally. It is obvious that the sector was slower in adopting fintech than retail banking and customer finance. Many organizations did not have a clear digital roadmap, or a digitization strategy. This is good news for digital providers, as they are set to capture at least 30 percent of corporate banking revenues. The other end of the stick sees startups providing small businesses with financial tools that manage spending and offer high level transparency. The continuing takeover of fintech is foreseeing a staggering US $2 trillion-worth amount of contactless in-store payments in 2020. This is thanks to the new peaks fintech keeps on reaching since services like PayPal became a thing. We are experiencing a third wave of innovation, and payments have gotten exponentially safer and faster, with more transparency for consumers and tighter links between banks and retailers.
The bottom line of embroidering business with technology is that the latter lowers cost. Technology helps harness information and share it, helping identify the truth. Global demand is continually growing for better financial infrastructure, real-time payments and access to data. Additionally, 82 percent of financial institutions are expected to increase their fintech partnerships in the next three to five years. This is because fintech finetunes the intricacies of financial operations; it cuts cost and increases speed.
Stay up to date with our insights, news and events