How Fintech is evolving and How Does that Affect Financial Information Systems?
In an article written by Chris Skinner, he argues that Fintech has grown so much that it is difficult to use “Fintech” as an umbrella term to describe all of the processes it encumbers.
The author describes that Fintech firms have three business models to choose from.
- Creating a New Financial Structure: This path has been helpful in raising funds for start-ups by connecting them with donors, rather than approaching a bank for a loan.
- Removing Friction from Financial Markets: This can be applied by creating an alternative system that can be setup much quicker, in comparison of the setting up through the traditional bank system.
- Reducing Costs and Overcoming Inefficiencies: Banking systems are much slower and cost more to run efficiently.
Overall, Fintech aims at reducing the limitations of a traditional banking system. Financial Information System are the backbone of Fintech system, in that the FIS does all of the data processing and established a list of controls.
While Fintech cannot replace the bank as a whole, it is important to remember that while banking systems are generally slower and outdated these systems take years to develop because of the amount of testing and development that is required to keep these system secured. While Fintech aims at creating faster solutions for start-ups, I argue that we should also consider the amount of testing placed on these Fintech systems. Remember its your money, wouldn’t you want it to be secured as possible?