Fintech. I’m sure it’s a term you’ll have heard a lot of over recent years – but I thought that it would be well worth reflecting on what exactly this very broad term covers – and its implications not just for banking, but also for the way we all do business today and in the future.
A quick definition
Fintech is short for ‘financial technology’ – an area that covers a huge range of possible meanings. To break it down to its most basic level though, it’s a term that describes the way that technology is now being used to transform how financial services and products are designed and delivered in some truly innovative ways.
Clearly the core technological advances that we’ve seen in recent years have driven all of this progress in financial technology – we’ve seen huge leaps forward in terms of mobile technology, cloud computing, and the use of big data and analytics – that have all fed into the fintech revolution.
The implications for banking
Today, the banking industry is making enthusiastic use of these technologies to reach customers more easily, to analyse their behaviour, to market their products to them in a more targeted way and to tailor the experience they have ever more specifically. That mobile app that allows you to transfer money between your accounts, the Initial Coin Offering (ICO) you’ve bought into, or the peer-to-peer lending alternative financing scheme you’ve put money up for – all are now possible only because of fintech.
Why it matters to you and your customers
All of these kinds of advances in financial technology have a huge impact on you and your customers – particularly if you’re operating on a global scale across diverse markets. While the implications of some of the more esoteric technologies – like blockchain – might seem to be less relevant, they are in fact hugely influential. Blockchain, for example, is the technology that underpins crypto currencies – and relying on the security and sophistication that this kind of fintech provides may well be the way you raise funds for your next business venture through an ICO.
Fintech is relevant for you and your customers on a much more fundamental level too, I believe – because it is a way of improving the customer experience. If they are able to process their purchases more easily at point of sale, or if the new technology improves the speed and efficiency of the way that your supply chain is able to then handle and process their orders, then this will strengthen those customers’ relationship with you and your brand. I’ve always believed that relationships are key to doing business effectively, and the fintech revolution, I believe, has been as much about human experience as it has been about zeroes and ones.
The future of fintech
So where will all of these advances in financial technology take the banking industry in years to come? Well, of course it’s always hard to predict, but I do believe that the development of blockchain technology in particular could be a real game changer. An open-source distributed database using state-of-the-art cryptography is a leap forward that could revolutionise the way we all collaborate – not just in the financial and business worlds, but in all areas of our online life.
Ultimately though, I think the future success of fintech comes down to one thing – trust. At present, many of these technologies are still incredibly new and relatively untested in a market situation – if we get to the stage where these innovators are truly able to calm users’ fears about security – as well as satisfy the regulators – then I think the sky is the limit for fintech.