Tencil Trends: An Intro to FinTech


What exactly is FinTech, what is the future of it, and does it cause more issues than solutions?

What is it?

FinTech stands for Financial Technology, in other words it’s when finance collaborates with technology for more improved products and processes. It refers to the use of technology to deliver a financial services and products to consumers. The term is constantly evolving and began with the association with banking but has now branched out to other industries such as insurance, investing, personal finance and other more customer-orientated services. Broadly speaking, nowadays the term refers to any innovation in how people transact business.

Examples of fintech

One-third of us utilise a minimum of two fintech services and are aware of fintech in our lives (EY’s 2017 Fintech Adoption Index). But are you even aware of the forms of fintech in your life? Using your digital wallet on your smartphone to opening a bank account online without physically visiting the bank, to budgeting apps are a form of fintech. Car insurance providers now use “telematics-based” insurance where your driving is monitored using data collected via a black box in your car, which is then used to determine how much you pay. When trading on capital markets, digital trading platforms allow trades to be done in real time electronically. With the recent emergence of online banking, investing and borrowing all off a smartphone, companies and services are having to adapt too.

What is the future?

In London, 40% of City workers are employed in financial and technology services, so it’s becoming increasingly common to know someone in the industry. Many fintech companies use AI algorithms for anything from predicting changes in the stock market to consumer spending insights. Robo-advisers offer financial advice digitally without the need for human intervention. This advice will be done based on algorithms, thus providing companies with a cost-effective alternative to human advisers. The speed, convenience and cheapness of fintech are all benefits of the advancement of technology.

However, with the move towards digital, fintech companies are more in danger of data security. Hacking can cause a hindrance to security, as often companies deal with sensitive consumer financial data- so there are pro’s and con’s to the tech transition. Due to this, many regulations such as GDPR laws are on the increase to protect both the individual and company. Additionally, individuals who aren’t able to access the digital world are excluded and the lack of human interaction also provides a risk to the industry.

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