Between 2008 and 2013, fintech investment quadrupled compared to venture capital. Fintech rose during the 2008 financial crises. This was because banks were unable to use any money on innovation, as they spent it on new regulations in order to satisfy regulators. The credit sector was completely frozen, mortgages were unavailable, student and small business loans were abandoned, and credit cards revoked. This left people unbanked (without a relationship with traditional banks), and under-banked (with jobs and bank accounts but with no or little credit). Since then, there has been a change in investments, tax, banking, financial disclosure and payment regulations. Most of which have created an opportunity for entrepreneurs to explore financial technology.
In 2011, people showed their distrust in financial institutions during the Wall Street protest. This spread internationally with even Clay Shirky, an American writer, pointing out that traditional financial institutions used ‘confusiopoly’. This is when banks give people a lot of information to create complexity when determining costs, therefore denying them an opportunity to make informed choices. Consumers end up crying for a system that looks into their interest and is transparent enough to show cost details. This is where Fintech comes into the picture.
Fintech companies have come up with innovative technology that give solutions. They have enhanced efficiency in the financial system. The companies deal in stock and trading areas, lending between person to person, crypto currency payment and transfer payments amongst others.
Fintech provides a choice for users, efficiency, timely, secure payments and greater accessibility. The technology has given consumers a better banking experience as the system is able to analyse consumer financial behaviour.
Future of Fin Tech
Fintech has a great potential to change the social economic lives of people. In Indonesia for example, only 20% of the 250 million people have banks accounts. The ASEAN countries form the third largest market in the world after India and china. These are potential areas where fintech innovators and inventors can earn a lot and change the lives of people. In Singapore, Onelyst is solving this problem. Its founders connect people who are licensed to borrow cash to those who do not qualify due to their financial status. The low income earners access loans for pressing personal needs and medical reasons. Mohamed Abbas, one of the founders said, “A transparent borrowing system for our vulnerable community should not be seen as a privilege. It’s an entitlement. We are working towards that vision.”
Fintech is a large industry as in encompasses every part of the economy. It is growing at a very high rate and by 2018, it is expected that it will be fully embraced in the world.
By: Mark Tomlinson EVERYTHING FINTECH–Representing in Confidentiality, clients and candidates, Globally