Financial technology, or FinTech for short, is one ofthe most exciting – and fastest growing – areas inglobal business today. While the definition may besimple,…

Financial technology, or FinTech for short, is one ofthe most exciting – and fastest growing – areas inglobal business today. While the definition may besimple, products and companies that employ newlydeveloped digital and online technologies in thebanking and financial services industries, how it isused, and its impact on consumers is much morecomplex. In fact, in a relatively short period of time,the emergence of a new generation of FinTech hasgreatly impacted how we do business, transact ascustomers, and think about the future of finance.Among other things, it is significantly blurring thelines between business services, allowing bankers,advisers, and technology providers to providenearly identical services.FinTech and the future offinanceBy Abu Bakkar, Chief Innovation Officer at HLBGetDrivers of innovationA variety of factors are at work when we look at theadvancement of FinTech.Technological advancements have changed how wedo nearly everything in our day-to-day lives.Technologies such as IoT, AI, blockchain and cloudcomputing are the major drivers of FinTechcompanies.Consumer behaviour, particularly in Gen X, Y and Z,has shifted and the previously existing financialsystems in some markets are simply not keepingpace with societal changes, allowing technologyenabled players to enter the market.Barriers to entry have lowered as technology hasflourished, forcing financial institutions to change orbe left behind. It has opened the door for newchallenger start-ups, like Monzo in the bankingindustry, who are targeting consumers with differentneeds and behaviours.Greater access to information through analytics,artificial intelligence, and cloud computing allowcompanies to see trends – and adjust to them –more quickly.Investment in the sector has been gargantuan andis continuing to grow rapidly, ensuring we will seemany more advancements in the near future.A new relationship with moneyFinTech has changed the way people think aboutmoney and value exchange in a real-time, digitalworld “Cashless” businesses are popping up aroundthe everywhere, forcing reluctant consumers toadopt the habit of digital transactions andgovernments to discuss whether it is discriminatoryor simply progress.GetRequiring consumers to pay electronically for goodsand services instead of using cash is just the firststep. Tech giant Amazon is leading the way inmerging an online shopping account with atraditional brick and mortal experience innine cashier-less convenience stores to test theirnew concept. Customers simply grab what theyneed, leave the store, and the items areautomatically charged to their Amazon account.Concepts like these will likely shape the future ofshopping.Payment transfers though smartphones orsmartwatches are another example of FinTechadvancements many consumers have adoptedtoday. While PayPal has been in this game for a longtime, relative newcomers like Venmo, TransferWiseand Zelle are revolutionising how we share moneyfor common interactions like splitting a bill andselling items to friends. Add to that the rise incrowdfunding sites like GoFundMe that allow nearlyanyone to create a simple way for those who careabout a person, situation, or cause to contributewith a few clicks.Much less understood, but likely more innovative inthe long run, is the rise of digital currencies likeBitcoin and the record-keeping technology knownas blockchain behind them. While not yet wellintegrated into our daily lives, it could eventuallygreatly change how we pay, save and borrowmoney, as well as how we manage financial risk.FinTech as an enabler for betterfinancial servicesIoT, AI, blockchain and cloud computing are some ofthe technologies driving change in how consumersinteract with those they purchase from and howthey manage their money. Although traditionalfinancial services players may consider FinTech adisruptor of their industry, those that are embracingGettechnology innovation are transforming the industryfrom the outside in, and succeeding in areastraditional players have failed in. FinTech companiesare now leading the industry and are creating awide range of new financial products and services,with the purpose of making money managementeasier and more effective.Borrowing & lending money: Getting access tofunds has become much more transparent and lesscentralised, and the traditional way of borrowingmoney from a bank via loans and mortgages isbeing joined by options like crowdfunding and peerto-peer lending. These new, non-traditional methodsof sharing money have allowed investors to flourishwhile giving those who may not qualify for atraditional loan access to the money they needthrough resources like Seedrs and others.Financial markets: Originally built in a pre-digitalworld, financial markets are seeing a good deal ofdisruption and innovation. The use of artificialintelligence (AI) and machine learning is allowingalgorithmic or automated trading in the stockexchanges. Prediction markets, like Augur,aggregate data through connections and networkintelligence to predict possible future events. Thisnew access gives individuals access to tradingfacilities that were once only available to corporateinvestors.Asset management: Data processing and analysistools and technologies have increased automation,specifically in asset rebalancing. Additionally, cloudbased, robo-advisory-enabled platforms are usingalgorithms to advise users about investment andasset management.Regtech: With changes happening so fast, it is hardfor many businesses to compete yet still remainwithin their industry’s regulatory frameworks. Usingbig data and machine-learning, regtech toolsmonitor transactions and identify outliers that mayindicate fraudulent activity. By identifying potentialGetthreats in real time, risks are minimised, and databreaches can often be addressed or completelyavoided.Grandtech: While FinTech companies have longfocused on Gen X and Millennials, some innovatorsin the market are creating protectionsto look after grandparents and great-grandparentswho are considered financially vulnerable. Entrantslike SilverBills in conjunction with Eversafe aim tomake it easier to administer the fragmented processof managing senior citizens monthly bills. By linkingall of the senior’s various financial accounts to theservice, the app can learn their habits and sendalerts when it spots something unusual, like 2:00a.m. ATM visits.New consumer marketsFinTech is enabling financial services providers toexplore new markets and allowing consumers inareas where options were few to access servicespreviously unavailable, through the use of mobiledevices. Access to under-banked and un-bankedconsumers is allowing FinTech companies to reachand capitalise on markets that have beenunderserved to date, particularly in Asia and theSouthern Hemisphere.Legacy economies in the West have long been “incharge” of the financial sector. However, because ofthe existing systems and traditional financialservices providers and institutions reluctance tochange, Western markets are slower to adopt newtechnologies than other parts of the world. Growtheconomies in places like China, India, and otherparts of Asia can leapfrog their Westerncounterparts. Banks and businesses in thesemarkets began building infrastructure in the late1990s and 2000s and are now reaping the benefits.For example, China’s mobile payments alreadyoutnumber cash payments, with $5.5 trillion paidGetthrough apps last year, dwarfing the $112 billion inmobile payments in the U.S. in 2016. Economies inthe Southern Hemisphere such as the Philippines,Indonesia, parts of Latin America and countriesacross Sub-Saharan Africa have largely been underbanked or un-banked for decades, but this ischanging due to the rise of mobile payment andwallet innovations. Thanks to telecommunicationsnetworks, most consumers in these markets nowhave easy access to smartphones, which enablethem to make digital transactions. Mobile sales forthese regions are anticipated to rise into the billionssoon.Where do we go from here?While advancements in the area of FinTech havebeen happening at lightning speed, we have onlyjust begun to scratch the surface of what is possibleand likely to happen in the next few years. It is noexaggeration to say that FinTech is literally changingour lives and habits by making it easy to trade, bank,and exchange money without the need for physicalhuman interaction. However, the financial sector hasa few challenges to overcome, especially in theregulatory and data protection space, to winconsumer trust and for FinTech to truly overtake themarket. With big data, blockchain, AI and so manyother tech advances already in use or on thehorizon, business leaders are advised to seekopportunities and adopt FinTech applications intheir own business models to win tomorrow’sconsumers.Financial Services GlobalTechnology The futureGetGet in touchWhatever your question our global team willpoint you in the right directionSign up for HLB insightsnewslettersBy submitting your email address, youacknowledge that you have read the PrivacyStatement and that you consent to ourprocessing data in accordance with thePrivacy Statement (including internationaltransfers). If you change your mind at any timeEmail addressStart the conversationGetabout wishing to receive the information fromus, you can send us a message using theContact us page.SubmitHome Insights FinTech and the future of financeHLBHead Office21 Ebury StreetLondon, SW1W 0LDUnited KingdomT: +44 (0)20 7881 1100F: +44 (0)20 7881 1109© HLB International is a global network of independent advisory andaccounting firms, each of which is a separate and independent legal entity, andas such HLB International Limited has no liability for the acts and omissions ofany other member. HLB International Limited is an English company limited byguarantee which co-ordinates the international activities of the HLBInternational network but does not provide, supervise or manage professionalservices to clients. Accordingly, HLB International Limited has no liability forthe acts and omissions of any member of the HLB International network, andvice versa and expressly disclaims all warranties, including but not limited tofitness for particular purposes and warranties of satisfactory quality.In no event will HLB International Limited be liable for the acts and/oromissions of any member of the HLB International network, or for any direct,special, incidental, or consequential damages (including, without limitation,damages for loss of business profits, business interruption, loss of businessinformation or other pecuniary loss) arising directly or indirectly from the useof (or failure to use) or reliance on the content of this Website or any thirdparty website, or from your use of any member’s services and/or products.Any reference to a member’s services or products should not be taken as anendorsement.HLB refers to the HLB International network and/or one or more of its memberfirms, each of which is a separate legal entity.About usServicesIndustriesInsightsLocationsContact usLocationsLegalPress roomJoin HLBMember loginGetGet

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