Author: kabir

While most can agree that fintech applications are a great aid to first world countries, it is clear that in these places there are countless alternatives to use, whereas in the developing world, fintech can be much more effective. In this way, a report concluded that the adoption of fintech could increase the “GDPs of emerging economies by 6% or $3.7 trillion by 2025.” Looking into the future and the best applications of fintech, I think it could clearly be very beneficial for emerging economies to be introduced to fintech, so that they can get their industries up to speed quicker thanks to the aid of technology.

Link to article: https://www.forbes.com/sites/oracle/2017/03/14/how-fintech-is-powering-the-global-economy/#45e14e911b5e

This article highlighted how artificial intelligence is likely to be a large part of the future of fintech due to the highly competitive environment requiring companies to leverage new technologies as much as possible. Competition in the industry is beginning to stiffen, so in the future, it will become more and more important for fintech to leverage technology like AI in their platforms in order to stay competitive with the competition. The main benefit that AI will be able to provide is eliminating guess work and human error that comes out of finance. For these reasons, it is believed by many that AI may hold the eye to the future of fintech innovation. It will be interesting to see in the future which companies are able to provide the best user experiences, which in turn are likely to set the basis for which companies establish the best brand images and user adoption rates.

Link to article: https://thenextweb.com/artificial-intelligence/2017/03/07/ai-will-determine-future-fintech/#.tnw_Hf7k5buZ

The lifespan of fintech as an industry has become significant enough that many have split it up into “waves,” with the first wave being disruption, then collaboration, and a new third wave, which is the cause of argument, but generally about maturity. After the global financial crisis is when fintech startups began disrupting the industry, creating the first wave, introducing products to the market that had never been seen, and while success in this wave is difficult, it represents the first time the public is introduced to fintech as a concept and incumbents definitely had to take note. Currently, I feel we are in the second wave, as many blog posts we cover involve fintech companies and big banks working together recently and integrating/collaborating for both their benefits. We are now at a time nearing the end of this second wave where there is much debate on whether fintech will be absorbed by the incumbents or fintech companies themselves will start looking more like traditional institutions. I think in reality we will see a little of both sides, some strong companies like Zopa and Number 26 have already applied for their own full banking licenses, while other smaller companies that still have novel ideas may be acquired by existing banks.

Link to article: https://www.crowdfundinsider.com/2017/03/96935-surfing-fintech-reached-third-wave/

In this article, the author Rohi Arora actually responds to a previous Forbes article which argued that fintech is failing, an article that was also covered on our own blog. As my response to that article began to touch on (https://blogs.scu.edu/finis/2017/02/13/three-reasons-fintech-is-failing/), while some fintech companies may be failing, as a whole, fintech is undoubtably part of the future of finance. The most significant reason fintech is thriving and will like continue to is that it as allowed access to capital to small to midsize business owners, who were previously a highly under-served market for investment. What technologies integration with finance has done is removed entry barriers and hurdles to receive capital that were previously in place and prevented small business owners from receiving capital. Technology has undoubtedly disrupted the status quo in an old industry and while many will try to hold off the fintech influence, as we have seen in countless other industries, the power of technology to shift how an industry operates is very strong.

Link to article: https://www.forbes.com/sites/rohitarora/2017/02/22/3-reasons-fintech-is-thriving/#59723c5c1017

At the Technology Tools for Today (T3) conference this past week, integration of AI and VR into tech was seen all around and fintech was no exception to integration of this new technology. Fidelity has integrated AI of Alexa from Amazon into their eMoney platform, allowing real time AI answers to financial questions. This was amongst many other AI and VR integrations that fintech is looking to roll out to the general market as soon as possible. I think it is beneficial for fintech to continually remain on the cutting edge of today’s technology, so that they remain up to date with the technologies of the day that are popular and do not get run up by competition that comes in and does a better job of tech integration before they can.
Still, I think the industry should be weary of integrating every little new technology that pops up just to be relevant, because it could mean that a new addition ends up being more novelty than useful and will not provide long-term value as a feature for fintech companies. For example, I can easily see a VR feature of money management being very visual and appealing, but it may not actually add enough functionality to a fintech platform to make it viable to actually add, so companies should keep in mind they are adding novel features that will provide value to their consumers.

Link to article: http://www.investmentnews.com/article/20170217/BLOG09/170219905/financial-technology-companies-embrace-artificial-intelligence-and

While cloud computing has been on the rise in recent years, and SAP has made their service available through the cloud so that companies do not need to have their own data servers, Steve Singh, SAP’s president forecasts that microservices are going to be a key in the future. Microservices are essentially apps being developed smaller and in separate pieces, rather than one complete program, such as Concur, which is a travel and expense manager. I agree with Singh that custom tailored services that are smaller will probably become more popular, because one of the biggest drawbacks I see with SAP currently is it can almost do too much, so it is complicated to learn and apply. If instead SAP was formed in much smaller apps, I feel that it would be much more straightforward to learn and use, because apps would only do specific things that you needed them to, so a company could have their own custom products to use that meet their exact needs.

Link to article: http://www.geekwire.com/2017/sap-president-steve-singh-says-cloud-computing-yesterdays-news-microservices-future/

One theme that I have been seeing in weekly blog posts is discussion about the present and future of fintech and banking’s relationship and whether or not banks will produce their own fintech to compete, or if they would rather seek to work with fintech companies, seeing the importance of FIS integration. The article I chose this week discusses this exact issue, as UBS’s COO speaks about how he believes banking is beyond trying to compete with fintech and should instead incorporate fintech and work with financial information systems as much as possible, realizing that fintech is the future.
I think this joining makes a lot of sense, because in the post 2008 market crash era, many fintech companies came up and innovated the finance industry; however, these companies still do not have the capital to scale effectively, so integration and working directly with big banks could help fintech become more immersed throughout society. Still, on the side of the rise of roboadvisors that do wealth management digitally for people, UBS’s COO feels that humans still have an upper hand in the level of understanding that we have and its benefits in investment management. As a Finance major myself, I agree that a human touch from financial advising cannot be replaced by AI; however, I do concede that fintech can improve and streamline many other areas of FIS.

Link to article: http://www.businessinsider.com/ubs-dirk-klee-fintech-roboadvice-china-2017-2

The automation that tech will bring to finance will help banks be able to reap larger profit margins, thanks to the cost savings of fintech. Many experts feels that digital payments will begin to blur the lines between technology and finance, as companies continue to push the limits of using technology to streamline financial information systems.
One huge benefit of the added technology is the fact that fintech can handle large amounts of data easily, allowing the ability to make credit decisions not only better but more quickly than ever before. A possible concern for people currently in the industry is that employment will most likely decrease in finance/banking due to the bulk of the work being done by technology. Furthermore, the jobs that do exist will be very different than the present, as you will most likely need an MIS background along with accounting/finance in order to be successful.
Last, as many other blog post have discussed, banks Implementing blockchain will allow for a reduction in costs thanks running ledger that is auto generated and keeps all history of digital transactions. Looking into the future, I think while competition will increase initially, long term, there will be consolidation in the industry, because only the companies that master fintech the best will last.

Link to article: https://www.ft.com/content/2f6f5ba4-dc97-11e6-86ac-f253db7791c6

As big banks are very risk adverse and small/medium sized business are often seen as quite risky, they have had a history of difficulty when it comes to dealing with banks and lending. In today’s world, there is good news for SMBs, because thanks to fintech, there is more competition in lending for loans, payroll, etc. The dual benefit of more competition is that these new fintech companies have a huge market of SMBs that want to work with them, and at the same time the SMBs can benefit from the increased speed, security, and convenience that the fintech companies provide.

Considering the banking industry is an oligopoly ruled by a few players, I think the rise of fintech provides the industry with a lot of opportunity for improvement through the use of technology and innovation like algorithms and encryption that will both improve the kind of services offered and lower prices for financial services, because many more players can now enter the industry. The use of technology in IS brings the great benefit of lower costs and less barriers to entry, while also allowing new and customised services to be created on company-by-company basis to provide for greater financial information service.

https://smallbiztrends.com/2017/01/fintech-trends.html

With the inauguration of Donald Trump imminent, law changes specifically in financial technology will surely be seen. Big players in this industry are “lenders such as Lenders Club, bitcoin and blockchain technology, also known as distributed ledger technology (DLT), money management applications such as Mint, money transmitters such as Venmo, and digital wallets,” as stated in a recent article.

Luckily for these companies, Trump’s campaign is pro for reducing regulation in the industry and similarly Congress, who is now a majority Republican is regularly against raising regulation in financial services. Furthermore, the Consumer Financial Protection Bureau (CFPB) is taking steps to be proactive with financial technology companies in that they will “review their products and services, as well as their compliance program,” while these companies are first forming so that they can set and understand compliance standards early on. I think is proactive approach to regulation is smart and government agencies should actively work with financial technology companies.

Finally, Congress is currently working on creating a Financial Services Innovation Office (FSIO) through a new act that would deal with all regulatory standards needed in the industry as it is a rapidly growing one and is likely here to stay.

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Financial technology rules are set to change in the Trump era