How FinTech is Changing the world of Finance
The Trinity Student Managed Fund recently held its first Fintech Conference on the evening of Monday February 11th. The objective of this new event was to allow Trinity students to understand the impact of fintech on financial services and the opportunities that are available in the industry today. The evening consisted of a dialogue between a panel of revered leaders in the industry discussing topics such as the impact of blockchain and artificial intelligence on the industry as well as what the future holds.
Fintech (financial technology) is changing the financial services industry and creating new opportunities and challenges for everyone, from consumers to producers, advisors to clients.
Global investment in Fintech reached $57.8 billion in the first six months of 2018, highlighting the scale of the investment in this area. According to the Fintech & Payments Association of Ireland (FPAI), fintech in its broadest sense consists of every area of technology and innovation in the financial services sector, including payments, trading and foreign exchange, big data, risk, compliance, business intelligence, consumer-focused currency exchanges and peer-to-peer lenders. Ireland’s unique ecosystem has led to the development of a world class fintech industry with one hundred and fifty indigenous fintech companies.
Disruptive innovations such as artificial intelligence, blockchain, machine learning, cloud computing and the use of big data are transforming the way financial information is processed and collected. This affects the way we save and borrow, the channels we use to pay for goods and services, and how we engage in money transfers between wallets and accounts, domestically and across borders.
Digitisation has revolutionised banking as we know it today. Mobile payment revenue worldwide in 2015 was $450 billion and is expected to cross $1 trillion in 2019. Smartphones with intuitive apps have given customers the advantage of real-time transactions. Fintech allows consumers to make quicker transactions at a lower cost. According to Finextra, approximately 40% of the world’s population will have a smartphone by 2021, up from a third of the global population in 2017. Another benefit of fintech, with regards to blockchain, is the introduction of transparency. Fintech projects create auditable money trails which can help identify potentially fraudulent activity quicker and more easily than a human.
Payment apps integrated with bank accounts allow seamless mobile to mobile payments and transfers. Moreover, the benefits of fintech for students are endless. New banks offer customers the opportunity to budget, break down spending into categories and then group them into useful sections such as restaurants, groceries and transport.
In addition, financial inclusion has improved globally and fintech has brought a new paradigm to the design and implementation strategies for financial inclusion. According to the World Bank, there are 1.7 billion adults globally that live outside the financial system, yet two-thirds of them own a mobile phone that could help them access financial services.
Mobile banking will continue to drive financial inclusion as it enables consumers to skip the step of banking with a traditional institution and allows them to bank directly on their mobile devices.
The future looks to be bright for the fintech industry. Advances in artificial intelligence and data handling and analytics will drive even more innovation in the sector. The ultimate winner will be the consumer as financial and technology organisations embrace a broader view of banking.