Introduction to Finance Technology:
Digital disruption is completely re-writing the business rulebook and those that don’t stay ahead will struggle to catch up with more agile rivals. New technologies are transforming companies across all industries from healthcare and entertainment to transportation and manufacturing – Intel refers to this extreme state of business disruption as the Vortex of Change.
Finance as a Service (FaaS) is revolutionising the financial industry as we know it. As a dynamic delivery model that improves on the old manual legacy systems, FaaS helps companies better manage their working capital, quickly deliver accurate forecasts, and reduce operating costs.
The erosion of payment processing costs, increased customer expectations for user experience, and the reduced regulatory barriers have all helped usher in this new generation of payments.
Finance and technology, now dubbed fintech, presents opportunities for entrepreneurs with innovative solutions.
How Technology is Shaping the Future of Finance
Technology and finance have always been intertwined, from the invention of the abacus to make financial calculations easier to the mammoth supercomputers that are used to drive complex financial models today. The fintech industry was born out of that merger, and now the majority of financial activity is carried out on mobile phones, enabling more people to have access to financial services.
Apart from increasing access, technology has also driven a variety of drastic changes to financial systems around the world and in some cases, upturning entire sectors as in the case of mobile investment apps and stockbrokers. The fintech revolution is continuous, however, and the following are some of the most pivotal trends which will shape the future of finance, driven by savvy entrepreneurs.
There has been a transformational change for traditional players in BFSI. The digital technology-led approach was to primarily have a data processing, automated system that would be given to the customer. The change that has happened in BFS, is that consumers now have more visibility and a choice in how things are done.
Here’s some finance technology effect we have listed:
As financial services have moved from the realm of face-to-face to remote interactions, security has been one of the major concerns that all stakeholders have had to grapple with. Cybercrime has continued to rise at an alarming rate, and ransomware payments are gradually becoming a standard operating expense for many companies.
Traditionally, financial institutions have guarded their customer data jealously to secure their market advantage. That has typically involved denying potential competitors access but has often seen banks denying the customers themselves full control over their data. Nowadays, the open banking concept has seen a resurgence due to the increase in data protection laws that allow customers to access and move their data as they wish, but also due to the increasing cooperation between fintech companies and traditional banks.
Open banking is reported to have generated $7.29 billion in 2018 and is expected to reach $43.15 billion by 2026. Open banking gives new fintech companies the ability to leverage big data to provide better — and more customized — services, helping people lower their debt, increase their income, and make more profitable investment decisions.
Cash is not dead. Yet. It is clearly on the way out though, as the world steers away from physical contact and mobile payment options become widely available. From small startups to technology giants like Apple and Google, mobile payments have become a priority in the financial services industry.
As digital technologies continue to disrupt industries and markets, the finance function must also transform to leap competition.