The world today depends on technology and the milestones achieved in the 21 st century would not have been possible were it not for technology. Technology is simply the science of craft and major developments in the field of health, transport, communication, and banking is simply due to technological advancement. Mobile banking is one of the major technological advancement of this era leading to what can be termed as financial technology. Financial technology is also known as ‘fintech' is an invention which provides financial services to consumers such as money transfer and payments by making use of technology. This essay will discuss what fintech is all about, its origins, conflicts of interest and the disruptions caused by it.
Fintech has a long history and can be traced from the 1950s with the introduction of credit cards, although currently, it provides a platform where people can pay without swiping their credit cards or giving cash. Technological advancement has been a key factor in the evolution of financial technology throughout the years, for instance, the introduction of the internet contributed to the flourishing of e-commerce business. Due to these inventions, fintech created sophisticated systems in the financial world where the risk was being reduced, payments were made faster and many more needs of the financial industry was being taken care of. The evolution in financial technology was thought to be a threat to banking but instead led to the growth of banking.
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Financial services are becoming more digitized by the day turning the world into some form of a cashless society. Some of the fintech services are performing the work used to be done by banks since banking is usually regulated by governments. Visa card is a good example of how financial technology is taking over the world or ruling the world as some may put it. According to the chairman of visa; Al Kelly, in India alone over tens of thousands of people are signing up to this form of cashless transaction. Kelly says that visa is giving QR codes to merchants in India and what Indian citizens do is they download applications on their phone and when they go to the merchant, purchase whatever they want then scan the code with their mobile phone which displays the payment due and transfers it to the merchant without having hardwired telepathy. Over two billion people are expected to be brought into the commerce system of the world through mobile technology and the internet over the next decade.
Though fintech is a hot topic right now, there has been conflicts of interest regulations imposed on it. There has been a scandal, fleeing investors and a subpoena at a high-profile financial-technology firm in the United States (Dexheimer, 2017). A treasury report recommended for stricter scrutiny of fintech firms and all this has made it tougher to lend on the internet to smaller businesses (Dexheimer, 2017). Lendingclub has therefore tried to hold dialogue with regulators and the relevant policy makers on the best practices for borrowers as the imposed regulations have strained what was previously a smooth procedure.
Due to the meteoritic rise of fintech, there has been speculation from certain quarters whether it is a fact or just a phenomenon that will pass away with time. However, looking at the available facts proves that fintech is not just a fad but it's here to stay. Fintech retail systems make up a multibillion-dollar industry and according to a report from Accenture, global investment in fintech has skyrocketed from $930 million to over $12 billion by the beginning of 2015 (Schueffel, 2016). As a matter of fact, Europe alone has seen a 215% growth rate. These figures show how much people are accepting fintech as the way people shop, buy and pay is changing.
Conclusion
Change is inevitable and it is only prudent to accept it. Since banks are regulated, the process of payment and deliveries take up much time and that is where fintech steps in. It is transforming the world into a cashless society which improves efficiency and security of one’s hard earned money. Fintech is evidently causing disruptions in the banking sector and mobile payment systems and is indeed a force to reckon with. Despite the regulations imposed, fintech is here to stay and is the system that will take the world into the future.
Reference
Dexheimer, M. (2017). LendingClub Is Ruining It for the Rest of Fintech . Bloomberg.com . Retrieved 7 April 2017, from https://www.bloomberg.com/news/articles/2016-05-20/lendingclub-woes-cast-shadow-on-washington-lobbyist-happy-hours
