Financial technology, also known as FinTech, is defined as the technologies used and implemented in the financial services sector. Although FinTech is widespread in financial institutions and is mostly the evolving convergence of financial services and technology, it can also be used to appeal to tech companies, startups, etc.
Its evolution over the years has also made it an extreme part of the global investment market. A 2015 Accenture study found that global investment in financial technology companies tripled from $ 4.05 billion in 2013 to $ 12.2 billion in 2014. As this phenomenon evolves, industries outside of the financial services sector are increasingly included ;; FinTech plays a role in every company and every industry in which the financial services market is involved, even if this is apparently superficial.
Driving innovation, developing technologies
In addition to promoting the development of novel technologies for use in the financial services sector, FinTech plays an important role in transforming the business of people who are irrelevant to the industry they are venturing into. In the old days, starting a business meant either getting a loan from a bank or finding an investor.
Thanks to FinTech, things are now very different from crowdfunding and money transfer. These technologies have resulted in profound changes in the way small businesses are started, payments are exchanged, and the innovations and services they offer.
It has driven innovation in a wide range of industries, including the financial services industry, which has traditionally maintained barriers to entry of new competitors. But with the advancing technological revolution, the ecosystem has undergone a change.
Growing influence on financial services
According to a 2017 PwC FinTech report entitled “Redrawing the lines: FinTech’s Growing Impact on Financial Services,” 95 percent of incumbents in the aforementioned industry believe that working with FinTech will bring the innovation they are looking for -Companies can be reached. This means that innovation is essential for all startups looking to provide established institutions with creative solutions to improve the user experience.
Thanks to FinTech, companies look beyond the archetypal strategy of acquisition or recovery. And beyond the horizon of typical growth strategies lies the innovation that is founded and driven by FinTech.
Take the investment industry, for example. The sector has introduced countless 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 tracks global market signals to provide daily recommendations. These recommendations are then used by Wealthify’s “investment team” to adjust and recalibrate clients’ investments to increase return and reduce risk.
Another proof of how FinTech enables innovation is AlphaPoint, a financial technology company that helps its customers bring new products and services to market by providing blockchain solutions for businesses to digitize assets, open markets, and cost of ownership to lower.
The speed at which the financial technology industry is evolving and the wave of rapid adaptation it has sparked force us to reconsider its role in the world – FinTech is now more of an “enabler” than a mere medium of providing Financial solutions and services. There is no doubt that FinTech’s impact on the market and its potential will only continue to grow.
About the Author: This article was written by Vikram Upadhyaya – Chief mentor and evangelist at GHV Accelerator.
“FinTech: Driving innovation on a broad front with rapid growth”,