FinTech: Driving Innovation Across The Board With Rapid Growth
FinTech is defined as the technologies availed and implemented in the financial services sector.
Financial technology a.k.a. FinTech is defined as the technologies availed and implemented in the financial services sector. Though FinTech is prevalent in financial institutions and chiefly represents the developing convergence of financial services and technology, it can also be used to allude to technology companies, start-ups, etc
Its development over the years has made it an extremely part of the global investment market too; a 2015 Accenture study stated that global investment in financial-technology ventures grew 3-times from $4.05 billion in 2013 to $12.2 billion in 2014. And as this phenomenon continues to evolve, it is increasingly coming to include industries beyond the realm of financial services sector; every business and industry the financial services market is involved in, FinTech has a role to play, even if seemingly superficial.
Driving Innovation, Developing Technologies
Other than encouraging the development of novel technologies for use in the financial services sector, FinTech has come to play a significant role in transforming how people do business irrelevant of the industry they are venturing into. In old times, starting up a business meant that you either had to acquire a loan from a bank or find an investor.
Things are a lot different now, thanks to FinTech such as crowdfunding and money transfer services. These technologies have resulted in far-reaching changes in the way small businesses are established, exchange payments, and the innovations and services they offer.
It has driven innovation across a broad spectrum of industries including the financial services industry, which has conventionally upheld impediments to the entry of new contenders. But with the ongoing technological revolution, the ecosystem has witnessed a transformation.
Growing Influence On Financial Services
According to a 2017 PwC FinTech report titled ‘Redrawing the lines: FinTech’s growing influence on Financial Services’, 95 per cent of incumbents in the aforementioned industry believe that the innovation they are on the lookout for can be achieved by collaborating with FinTech companies. This means innovation is essential for any and all start-ups looking to aid established institutions with creative solutions to improve user experience.
Thanks to FinTech, companies are looking beyond the archetypal strategy of acquisition or recreation. And beyond the horizon of typical growth strategies lies innovation, both founded and driven by FinTech.
Take the investment industry for example; the sector has fielded myriad innovations over the years including Wealthify’s ‘Robo Investment’ plan. The Cardiff, Wales- based company’s proprietary algorithm is based on the Nobel prize-winning Sharpe Ratio and keeps track of global market signals to furnish daily recommendations. These recommendations are then used by Wealthify’s ‘investment team’ to adapt and re-calibrate customers’ investments to boost returns and reduce risk.
Another testament to how FinTech enables innovation is AlphaPoint a financial technology company that helps its customers launch new products and services by providing institutions enterprise-grade blockchain solutions to digitize assets, launch markets, and reduce operational costs.
The rate at which the financial technologies industry is evolving and the wave of rapid adaptation it has ushered in forces us to take another look at its role in the world — FinTech is now moreabout being an ‘enabler’ than being a mere medium of provision of financial solutions and services. There is no doubt that FinTech’s influence on the market and its potential will only continue to grow.