Emerging Technologies: FinTech.

History

 

FinTech started to evolve in the 1990s when the Internet and E-commerce market models emerged, and by the following years, most banking had been entirely digitalised. After the Global Financial Crisis in 2008, where many people lost trust in conventional banks, security and transparency had been more critical than ever. This change in perspective enabled the development of new customised solutions and regular practices, such as providing access to banking profiles, billing, and money transfer in converted currencies. (FinTech Weekly, 2021)


 


Definition

 

The word FinTech has been used in a variety of sectors worldwide, sometimes in unpredictable and vague ways. So far, no effort has been made a shared understanding of the term FinTech. (Schueffel, 2016) Nowadays, researching FinTech definition is challenging itself as there is no standard description of what FinTech is and what essential innovations the word includes. (Marck A, et al., 2019). However, many authors converge that FinTech, as the term implies, is a composition of finance and technology. For instance, technological advances have already affected the finance market, with advancements transforming how the financial sector works. (Itay, et al., 2019) FinTech is described generally as any technology that facilitates or improves the provision of financial services. (Marck A, et al., 2019). Another definition for FinTech (Financial Technology) refers to technological and other modern technologies that companies use to deliver digital and enhanced financial services. (Fintech Weekly, 2021)




Disrupting Technology

 

FinTech refers to the finance industry and technology-enabled business model innovations. Such technologies have the potential to challenge current market models and faint industry lines. To promote strategic disintermediation and revolutionise how existing companies produce and offer goods and services in the financial sector. Furthermore, it opens new doors to investment and permits more access to financial services (Thomas, 2016). FinTech is expected to disrupt, broad and long-lasting influence on the financial services market due to its innovativeness and potentially disruptive effects. (Schueffel, 2016)

 

The rapid advancement of FinTech in recent years has drawn substantial interest within the finance industry. (Schueffel, 2016) Many analysts have applauded the growth of FinTech, arguing that digital innovations can fundamentally change financial markets, causing transfers less costly, more efficient, and more secure. (Marck A, et al., 2019). FinTech's scope includes cryptography, electronic payments, money transactions, peer-to-peer loans, crowdfunding, data analytics, blockchain, cryptocurrency, Robo-advising and the Internet of things (IoT). New technology start-ups are rushing to fill the gaps in the consumer interface left by existing companies on both of these dimensions. (Itay, et al., 2019)


 

Mobile payment applications, cryptocurrency and blockchain, such as Bitcoin, Wise and Gemini, are iconic examples of FinTech throughout users' lives daily. The potential spectrum of FinTech offerings is expected further to transform the industry with AI and machine learning, making FinTech offerings a vital part of users digitalised live. (Itay, et al., 2019). These innovations are based on the idea that FinTech is essentially a set of newly created digital computing innovations that have been introduced to financial services. (Thomas, 2016)



Keywords: AI, Bitcoin, Blockchain, Cryptocurrency, Disrupting, Emerging Technology, E-commerce, Finance, Fintech, Innovation, Internet of Things, Technology.


By Fernando Brambila


References


FinTech Weekly, 2021. FinTech - A definition by FinTech Weekly. [Online] 
Available at: https://fintechweekly.com/fintech-definition
[Accessed 8 April 2021].

 

Itay, G., Wei, J. & G Andrew, K., 2019. To FinTech and Beyond. The Review of Financial Studies, May, 32(5), pp. 1647-1661.

 

Marck A, C., Qinxi, W. & Baozhong, Y., 2019. How Valuable is Gintech Innovation?. The Review of Financial Studies, 32(5), pp. 2062-2106.

 

Schueffel, P., 2016. Taming the Beast: A Scientific Definition of FinTech. Journal of Innovation Management, 4(4), pp. 32-54.

 

Thomas, P., 2016. The FinTech Opportunity | NBER. [Online] 
Available at: https://www.nber.org/papers/w22476
[Accessed 8 April 2021].


Comments

  1. Daniel Taiwo EnisanApril 11, 2021 at 4:15 PM

    Nice piece Fernando. I will just like to say that the rise in fintech companies and virtual banks have opened up a new world of careers in the financial faculty. The advancement of technology has made the financial sectors more skilled oriented that it was previously. Many tertiary institutions have begun to roll out courses that will produce more highly skilled labor. Also, it is good to see that the government parastatals are catching up to this and they are doing the needful to stay abreast of the situation of things in the financial sector especially with the advancement of the blockchain technology.

    ReplyDelete
  2. Aslihan YilmazApril 15, 2021 at 11:03 PM

    Your post about the rapidly developing Fintech industry in recent years is really inspiring. One of its subbranch is Regtech innovations. Regulation technologies are a field that provides transaction monitoring and compliance software to prevent money laundering, terrorist financing and human traffic. Regtech companies, which have grown rapidly in the last two years, provide products that fintech companies and banks can work together departmentally, report suspicious activities and perform risk analysis. Emerging technology used to create these software is Machine Learning. Therefore, the transactions of the customers of the companies worked with can be controlled regionally and whether it is suspicious or not.

    ReplyDelete

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