A Brief Introduction To : FinTech
If you have ever used an online payment service such as PayTM,PhonePe or GooglePay, you have already taken part in the world of FinTech. It is a term that keeps coming up consistently in the fields of technology and finance and is considered by many to be a multi-billion dollar industry.
FinTech is an amalgamation of the words Finance and Technology and the goal is to improve financial activities (such as investments, loans, payments, etc) with the help of technology.
It is gradually transforming economies around the world by introducing a different approach to financial services such as
->Performing transactions (cashless payments)
->Crowd Funding Platforms (gofundme,patreon,kickstarter)
->Virtual Currencies (Crypto currencies such as Bitcoin/Dogecoin)
What's more interesting about this industry is the investments being made in the companies that are working on such technologies. According to research by Accenture there has been increase in Fintech investments made by investors and the trend has been captured in the infographic down below:
Apart from shareholders and businessmen, major Multi-National-Corporations are also getting involved with their own FinTech.For instance :
->Apple came out with its digital wallet called ApplePay earlier this year
->Google have their own flavour of online payments called GooglePay which is very popular in India.
->AliBaba have their own payment option as do Amazon.
The rapid growth in this industry is supplemented by the fact that more and more consumers are adapting to fintech quickly.According to EY Fintech adoption index, every one in three customers in the top 20 economies in the world said that they used 2 Fintech services in the last 6 months.
China and India are two of the biggest adopters of these technologies with around half of the people using Fintech for services such as money transfers, financial planning, loans and insurance.
Fintech company Mpesa has had a resounding impact in Kenya and neighbouring African countries by providing their services for customers to manage their finances and now it is reported that around 96% of the people in Kenya having a bank account use mpesa for their transactions. It is also said that around 2% of them have been lifted from extreme poverty.This goes to show the impact that FinTech can have on developing nations and the potential it has in the future.
While Fintech has improved the lives of many Kenyans drastically, it has also changed how traditional Lenders, insurers and budget managers conduct their operations, influencing them to learn and embrace these digital technological advancements in order to aid financial planning and decision making.
Risks associated to FinTech corporations:
Financial regulator bodies such as FRS,RBI etc. find it difficult to regulate the industry and introduce policies as the industry keeps evolving rapidly, which could lead to unfair opportunities for select individuals with influence in the industry. 2. Cyber Security
As more and more people and organisations adopt these technologies, more data is generated and the chances of cyber crimes increase.