The term “financial technology” has certainly evolved over the years. At one time, it referred to the use of an abacus when calculating ancient taxation rates. During the latter half of the 20th century, cutting-edge technology was associated with pocket calculators and offline spreadsheets.
We are now living within a world that seems to usher in new financial technology on a regular basis. Therefore, it is no great surprise that it can be difficult to appreciate where we may be headed. What purposes do these systems serve? How can they benefit individuals as well as corporations? Is there any way to predict what the future may have in store? Each of these questions warrants a closer examination.
Financial technology at a glance
What exactly does finance technology entail? From a generalised perspective, this sector is associated with any system that automates and enhances the delivery of fiscal services to the end user. Often referred to by the portmanteau FinTech, many of these actions are now based within the digital domain.
The types of financial technology can nonetheless be grouped into several discrete categories, including:
- Tailor-made smartphone applications.
- Online money transfers.
- Automated investment services.
- Cryptocurrencies and the blockchain.
As this article highlights, the majority of wealth management specialists now consider the FinTech sector one of the most important utilities at their disposal.
How can this technology be leveraged to offer superior results?
It can be argued that the financial technology industry is centred around a handful of principles. These include automation, efficiency, accuracy, security, and customer satisfaction.
We should nonetheless mention the notion of agility before moving on. Contemporary institutional investors are no longer interested in “cookie-cutter” solutions. They instead require bespoke packages that are moulded around their discrete requirements. The malleable nature of financial technology can transform such a notion into reality.
Furthermore, a quick and streamlined means to access proprietary data will likewise result in higher levels of efficiency. This only stands to reason when we consider the fast-paced nature of the investment community. Thus, it makes perfect sense that technology investment is on the rise in recent years.
The multifaceted nature of financial technology
A financial technology company will often provide a variety of services to its client base. These are designed around the type of demographic being catered to as well as what market(s) the firm is associated with. Having said this, here are some of the most popular FinTech uses (in relation to hierarchical adoption rates):
- Digital transactions (such as payments, deposits and withdrawals).
- Insurance packages.
- Investments and wealth management.
- Financial planning.
- Loans and other types of structured borrowing solutions.
As finance and technology become even more interwoven within the digital domain, there is no doubt that such methods will continue to gain ground.
How have the attitudes associated with financial technology changed?
Although the advantages attributed to financial tech are clear, real-world implementation did not occur overnight. One reason behind this observation involves the simple fact that humans tend to be wary about new technologies that have not yet been proven. Some likewise doubted if highly automated and digitised services would be capable of providing personalised solutions.
Although these concerns might have held some merit during the 1990s and the early 2000s, the fact of the matter is that we are living in a brave new (digital) world. Well over half of all wealth managers now feel that FinTech companies are absolutely essential in regard to providing streamlined solutions to their clients. In the same respect, the average consumer has become accustomed to options such as automated banking, e-wallets and online financial planning. This is due in large part to the decidedly ubiquitous nature of the services themselves.
A synergy of humans and machines
It should be stressed that finance tech and traditional techniques often represent two sides of the same proverbial coin. In other words, the most reputable investment advisory firms utilise both in tandem. This helps to ensure targeted solutions while simultaneously offering clients a greater level of efficiency. Still, each approach boasts its own unique strengths.
Human interactions are often associated with tasks such as personal consultation, the ability to develop long-term relationships and an organic appeal. Automated services (such as those provided by a FinTech bank) are frequently employed when performing complex calculations, portfolio analyses and when interpreting big data.
What is the future of financial technology?
We are now beginning to witness the rise of the “financial technologist“; an individual who specialises in personalised asset management with the help of the latest digital innovations. This will ultimately redefine the entire sector as we know it.
Of course, there are still some hurdles that may need to be overcome. Examples include thwarting instances of data theft, complying with governmental regulations and guaranteeing a positive end-user experience. It is nonetheless a fact that financial technology is here to stay. As the uses become even more relevant, individuals and institutions alike should benefit from its applications. In terms of adopting FinTech, the best companies will make it a point to remain well ahead of the curve.