What is Fintech?
Traditional industries across the world are experiencing more and more disruption as the large monoliths, that have dominated for so long, experience competition from small, dynamic start-ups who are challenging the very nature of their business. At the heart of much of this change is technology and the flexibility it can bring to consumers, putting the power back in their hands.
This disruption now has a grip on the banking sector as many start-ups emerge in what is known as "Fintech". But if you've worked in financial services before, or have skills such as software development or digital marketing, you might be wondering "What is Fintech?" and would I like to work in this sector?
What is Fintech?
At it's most basic, as I'm sure you have worked out, “Fintech” is the amalgamation of two words; “Finance” and “Technology”. However, since the 'Credit Crunch' a decade ago there has been a real shake up in the financial world. The UK governments pushed to increase competition and improve customer experience by forcing the banks to share the data they had available. This reduced the barriers to entry and opened the doors for smaller businesses to enter the market, hence the rise in Fintech companies. The development of new technology, particularly the development of mobile banking, has not only given birth to a new arm of this industry but it also sounded the death neal for many traditional banking outlets as we see high street branches closing on a regular basis.
Every day examples of this are mobile phone banking apps, contactless payments and cloud accounting software – allowing users to keep account of their transactions and accounts whilst on the go, saving both time and money.
Fintech across the Industry
“Fintech” can be found in many areas within financial services such as “Consumer Lending”, “Smarter Personal Finance”, “Stocks & Trading” and Core Infrastructure Systems (banking, trading and insurance) to name a few.
There are of course challenges that come with new technology. Fintech companies often face doubts from financial regulators such as banks and governments and there can be funding issues.
There are also issues over cyber/data security particularly with the introduction of Blockchain - a technology that allows participants to transfer values across the Internet without the need for a central third party.
Blockchain could actually prevent the risk of hackers long term as there will be no need to utilise a centralised database. The technology is still very much in its infancy and there is some way to go before this can become mainstream and fully regulated.
Jobs In Fintech
All these different requirements have thrown up a range of different types of jobs within the financial sector that might not have been there a few years ago. To many the accountancy sector should be leading the charge in the direction of Fintech helping the small business to thrive and keeping the larger organisations ahead of the curve with new developments.
As Philippa Kelly, the Financial Services Assurance Manager of ICAEW said: “the accountancy sector should be at the forefront of helping companies embrace the opportunities fintech brings. Many are not taking advantage of these open opportunities – Chartered Accountants can play a central role in educating companies on the benefits of fintech, as well as the optimum time to invest. It feels like everyone is talking about fintech, but knowing how it could benefit you and your business, and the potential risks involved, takes time to understand.”
Fintech moving forward
In conclusion, fintech solutions are reshaping how the financial sector operates, and will continue to demand a range of different jobs to meet the needs of an ever more digitally savvy consumer. For the financial sector and the large players that have dominated the market for so long, it is perhaps time to look at partnering and supporting these new developments as they emerge, embracing the entrepreneurial talent and learning form them to maintain your place in the market.