FinTech

FinTech

What is FinTech? It is a multi-billion dollar industry and it means Financial Technology. It includes a range of Products, Technologies, Business Models that are changing the Financial Services Industry. It refers to cashless processes, crowdfunding platforms, roboadvisers and virtual currencies!!! Start ups using FinTech are currently attracting more and more attention and funds. Big companies are also going into FinTechs, with examples such as Apple Payer (Apple) or AliPay (AliBaba). 

It is estimated that 2 billion people world wide do not have bank accounts!!! Now thanks to FinTech all you need is a phone to take out a loan or insurance. Kenya has pioneered a mobile banking system called MPesa. Kenyas access MPesa directly through their phones to transfer money, pay bills, or take out loans. Fintech has forced traditional Lenders, Insurers and Asset Managers to embrace new digital technologies. Wealth Managers now have to compete with roboadvisers which are automated financial planning services. Thanks to high tech algorithms these services are available 24x7 and can be more affordable than traditional asset managers. Examples of FinTech include:

1. Peer-to-Peer Financing: they appear as solutions for people to lend and borrow without going to the bank. Data privacy is one main issue of concern as more financial services go digital, cyber-attacks become a risk. The higher the risk, the higher the interest rate demanded.
2. Cognitive AI: they go a step beyond normal data crunching and can see and analyse patterns and accelerate/optimize decision making.
3. Digital-only banks: almost every bank offers mobile and web-based access. Digital Banks go one step further and rely solely on a digital interface. They save physical costs and pass on cost savings to customers.
4. Mobile Payments: they represent the head of the FinTech value pyramid for now. Mobile payment apps have reduced the time and cost to make online payments.The payment revolution is just starting!!
5. White Label Banking: it allows companies without a banking license or a regulatory infraestructure to offer financial products to their customers.For ex, a card issued and branded by a retail store but using the payment infrastructure of a licenced bank.
6. Telematics (Insurance): an example is a small device is installed in your vehicle which tracks your car and determines your premium based on how you drive. They apply not only for auto-insurance but also for safely renting out vehicles.
7. RegTech: they intend to automate regulation compliance, from credit card fraud detection to monitoring financial risks thresholds.
8. Virtual and Cryptocurrencies: they range from ways to transfer value, to smart contracts and decentralized storage to leasing smart devices.
9. Web-based financial planning tools: large corporations use ERPs to manage their financial budgeting, planning and forecasting needs while small businesses are using excels which take up a lot of time. By implementing new tools the user only needs to feed the raw data and define the relationship between certain variables, and the system automatically produces a number of reports, graphs and insights that can be plugged into an investor presentation.
10. Financial learning: apps offer the opportunity to practice your trading skills in real time, using dummy accounts on simulated exchanges. 
11. Robo-Advisors: they provide easy and accesible basic invesment advice to consumers, eliminating tasks previously performed in excels files.

The appearance of FinTech, low cost easy to develop financial technology, put a Question (?) mark on the role of Business Majors itself. Is it really worth it to take a PLACE in a company and attempt to climb the corporate ladder? Or is it SMARTER to team up with engineers adding value with products and services needed by the financial world and build a billion dollar business? In my article "The Need for Business Majors in the Tech World" I explain how Business Majors add value and should ideally team up with engineers to build businesses. In a world of rising inequality and unemployment, and acknowledging that professional jobs will also be automated and lost in the NeXT few years, it might be that reinventing the business carrer itself and switching to the technology sector is the way to GO for business majors.