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Financial technology has revolutionized the finance industry. It has made everyday financial services easy to execute and at very cheap costs. Fintech is advancing every day and recently it has been said that Artificial intelligence will become a big part of fintech. Analysts predict that over the years artificial intelligence will make it big in the field of fintech. The setback to this is that it might take away jobs of people in order to reduce cost and increase efficiency. This will potentially remove the human element from the fintech industry. This is by some perceived to be good and by some bad for the fintech industry. As fintech deals with people’s money there is a high trust factor involved while using these services. Once the human element is taken out from these services it might prove to be really hard for users to trust these services. In my opinion this could prove to be true as once someone wants to invest through a fintech company and realize that the service uses artificial intelligence to communicate and invest it people might be doubtful to trust them as compared to a company where the customers have the convenience to talk to a human being. Therefore, It is hard to say how artificial intelligence will effect the fintech industry, but either ways it is slowly coming in the fintech industry.

 

https://www.forbes.com/sites/madhvimavadiya/2017/02/27/artificial-intelligence-human-fintech/#4a9e899d46a1

 

 

The startup Fintech company named Revolut just launched a brand new credit feature for U.K users. Revolut is working with Lending Works to provide features to customers. Lending Works is a peer-to-peer lending company that matches individual lenders with borrowers. Customers can select how much money they want and the number of months they need to pay it back. After entering your monthly income and residential status, you will get a quote and you have the option to accept or decline. In addition, the borrowing APR rate is lower than credit card or a traditional loan.
Except for this plan, Revolut is planning to have travel insurance, investment products and also lending and borrowing in multiple countries. We can see that after Fintech has launched, financial institutions have very severe competitions from those Fintech startups. Those startups offer better deals in a more convenient way to customers. Therefore, the traditional banking institutions are facing very big challenges right now. However, banking institutions have higher reputations and people from older generations are tend to trust traditional banking than the new startups. Although Fintech startups provide better products, it still takes time for them to build great reputation.

Revolut users can now apply for credit in just a few minutes

For most tech firms, China is the hottest market for expansion. China has long been an up and coming economy with the densest population in the world. If a foreign tech company was to succeed in the Chinese market, it would open an entirely new avenue of revenue to be generated from its population. Currently the most successful firms in China are largely Chinese firms that have immediate access to the population. The financial technology industry in China seems to be expanding much like the rate in the United States. Many US fintech firms are vying for a position in the Chinese market, but many of them don’t actually know how the Chinese financial technology market actually functions.

There are multiple similarities between the financial technology market in China and the United States. Many citizens use fintech for buying and selling items as well as P2P transactions. The key difference between the US market and the Chinese fintech market is that the mobile market for the US is relatively mature and encompasses most of the market. China still has a young and rapidly expanding mobile market. A fintech company needs to be scalable in order for it to be successful in a market with over 1 billion inhabitants.

 

reference: http://www.scmp.com/business/china-business/article/2073798/how-financial-technology-driving-chinese-consumer-spending

Financial Technology is a growing industry and how will it shape the future of business transactions?

Image Source: https://letstalkpayments.com/wp-content/uploads/2016/01/SEA-FinTech-companies.png

In an article, written by Rebecca Campbell Fintech is drastically growing in the Asian market.

For example in India, they demonetized the banknotes, the Rs 500 and Rs 1000. How does this affect people’s wealth? Also inside the country many people are adopting Bitcoin, but are the conventional banks able to keep up?

While FinTech and Financial Information Systems are both directly related to each other. It’s important to note how the importance of FIS will become in the near future.

Countries such as China and Japan has drastically increased their investments in FinTech. There has also been legal agreements between countries promoting FinTech.

Countries and companies themselves will now have to invest more into Financial Information Systems and the need to keep these systems secured and efficient are becoming more urgent than before.

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

Fintech is going to have its own community soon. The Bank of England has launched a new community which brings together fintech-related organizations including startups, investors and regulators to engage with bank and share the developments in fast-growing fintech sector.

Central bank’s fintech accelerator, which works with financial service firms to develop new approaches has launched this initiative for building its understanding of fintech technologies and in return support development of the sector.

Community Members will have bilateral meetings with the Bank two-to-four times every year for sharing updates on trends and developments in the sector. The Accelerator team will also hold quarterly networking and knowledge sharing events to discuss developments, trends and insights on specific topics of interest.

The 18 founder members of the community include fintech investors Illuminate Financial Management and Euclid Opportunities (part of NEX Group), the Financial Conduct Authority, sector trade body Innovate Finance, data security startup Privitar and law firm Simmons and Simmons.

Community membership is expected to grow over time, but initially it will be limited to firms that are “most relevant to the bank’s remit and fintech objectives, and who have initiated contact with them for knowledge sharing purposes”.

This initiative by Bank of England validates that the fintech industry is no longer a niche industry and has the potential to disrupt traditional banking system. Only way for banks now to cope up with advancement with fintech sector is to collaborate and make progress collectively.

 

Reference: https://www.fnlondon.com/articles/bank-of-england-gathers-minds-for-fintech-salon-20170317

In a recent Harvard Business Review article titled – “The Blockchain Will Do to the Financial System What the Internet Did to Media” (Ito, Narula, & Ali, 2017), the authors present an excellent article identifying several similarities they see occurring with this new Fintech to the conditions that were present during the birth of the Internet. At first read, it appears their arguments do not support their assessment, but after a deeper analysis, I think they’ve nailed it. The Internet took decades, and we are still below the 10-year mark for Bitcoin and Blockchain, so it’s still maturing. With the Internet, there was a strong desire to network and communicate. With Blockchain, mainly Bitcoin, it is deregulation, decentralization, and security as the driving factors. Email brought the masses to the internet, and Bitcoin did the same for Blockchain.

The major differences between the two, which could be viewed as a hindrance, is that the Internet was born out of defense funding and major university research and development, whereas Blockchain is tied too closely to commercial development and profit-driven business models. This, as the authors point out, is stifling the development of the necessary interoperability protocols and standards. I agree this is problematic, but big name contributors like Google, IBM, Microsoft, Big 4 Accounting Firms, and the global appetite for de-regulation and security are filling the gap and will drive the necessary governance over the long term. We still have a decade to go!

 Ito, J., Narula, H., & Ali, R. (2017, March 8). The Blockchain Will Do to the Financial System What the Internet Did to Media. Retrieved from Harvard Business Review: https://hbr.org/2017/03/the-blockchain-will-do-to-banks-and-law-firms-what-the-internet-did-to-media

This article highlights how fintech is going to be the way that developing economies can grow in the near future and how they will not have the same banking institutions that we have in developed countries because of this. The article references how a fintech agency call M-PESA, a mobile money system introduced in Kenya in 2007, is widely popular and has more than 15 million subscribers. As of 2014, the subscribers transact nearly 60% of the country’s GDP over the mobile platform. This is an insane number! A report last year indicated that the usage of digital finance platforms in developing countries could increase the GDP of all developing economies by 6%, or a total of $3.7 trillion, by 2025. While it is obvious that mobile money systems is incredibly convenient for those in developing countries, it will change the economics and the institutions that we are accustomed to seeing in developed economies. Big banks will have to adapt to this new technology and academics will have to change their models on how emerging economies transform into advanced economies.

Article Link: https://www.forbes.com/sites/oracle/2017/03/14/how-fintech-is-powering-the-global-economy/#436435d71b5e

Since the financial crisis, there has been a financial technology resurgence in emerging markets. Increasing mobile phone use across the globe allowed for a 700 million increase in number of people holding bank or financial service accounts between 2011 and 2014. With more globalization and free movement of people across borders, we also note the increased capital mobility in the economy because of such inclusive financial technology. Mobile financial services users are increasing and with it comes the increased mobility of capital that will lead to positive effects for the economy. Initially you can note that more people will be able to partake in the using of money which is an automatic economic boost. In addition, certain fiscal and monetary policy is more effective with greater amounts of capital mobility. For these reasons and more, financial technology that is increasing financial inclusion has enormous upside and should be further supported globally.

http://digiday.com/marketing/ask-vc-mobile-phones-giving-millions-access-financial-services/

During his presidency and campaign, President Donald Trump strives himself behind making America competitive in industries where they don’t have a competitive advantage, specifically manufacturing. However, his focus for deep change causes him in this area has caused him to lose focus on the potential in other industries like fintech. The U.S is adapting perfectly to the rise in fintech but its the government regulators that are late to the party and aren’t capitalizing on the monetary value in fintech. Other countries such as Switzerland, UK and Singapore have benefitted from regulations such as advance blockchain technology, new testing places where new financial technologies can be used first hand, prior to release, and more foreign relations are created for transactions and foreign exchange base. There are a lot of things like the SEC and bank regulators can do with the resources that the U.S has that no one else does. One suggestions would the be the utilize the highly invested artificial intelligence technology for automated financial advising to ensure SEC regulations and codes are followed. We already invest billions of dollars in AI and its only a matter of time before it starts its revolution in the states. By starting early, you are putting the U.S at a huge advantage against every other country and could make millions off of regulations or taxes when the technology is properly harnesses, it just needs more attention from government in order to come to fruition.

URL: http://www.nasdaq.com/article/mr-trump-dont-miss-the-fintech-boat-cm759822