Trying to stay on top of fintech might be causing your head to spin, but there’s nothing particularly mysterious about the buzzwords. The real challenge is identifying important trends and anticipating how they may impact your industry and your organization. There’s no doubt that the pace of change is dramatic and disruptive, but it’s important to stay up to date with the latest developments in the space.
What is Fintech and why does it matter?
Fintech is the application of technology to the financial world. Most of these types of applications build on existing technologies to make money matters easier and faster. But some elements of fintech are starting to use cutting edge technologies such as blockchain and artificial intelligence (AI).
Important trends to watch for in Fintech
Bringing financial services to the unbanked and underbanked
The goal of fintech is to make financial services less expensive and more flexible per transaction. The greatest promise potentially lies in reaching the unbanked and underbanked, as they lack access to traditional banking channels. Bringing effective financial services to these individuals offers benefits to consumers and businesses alike. Fintechs that can enter this space successfully will reach a wide swath of new customers. It has the very real potential to have a positive impact on global poverty.
When it comes to the “tech” in fintech, think broadly
The real advances in fintech have been in existing technologies, rather than those driven by artificial intelligence. Chatbots, for instance, can now truly enhance the customer experience and are significantly better than the first unwieldy attempts. Data collection and analysis enable comprehensive customer profiles in order to improve credit and risk assessment and minimize revenue loss. AI is also beginning to help streamline decision-making processes.
Successful innovation requires thinking beyond technology
Most successful fintechs today aren’t built on cutting edge technology. Instead, they have discovered how to leverage and amplify the advantages of existing technologies. Successful innovation comes from matching the right technology with the right demand, at the right time. The impact of technology lies in the product or service the technology has actually created and how it’s perceived, applied, absorbed. And successful innovation requires substance, not show.
The challenges ahead: implementation and regulation
Fintechs have been disruptive because they appear to have all the advantages. They are smaller and more flexible; they don’t carry the burden of existing technological infrastructure. Traditional banks, on the other hand, often do not have such luxury. Many of them continue to struggle with IT infrastructures that are not only out of date but also layered with patches.
