FinTech as a financial term has got into the mainstream news and vocabulary in 2017, and it should come as no surprise.
Short for ‘financial technology’, the way we as individuals and large multinational corporations manage our finances is set to change for the better due to the natural evolution of technology in the digital age.
Whether you’re acquainted with FinTech right now or not, everyone should be making an effort to at least understand what it is and why it’s really going to matter over the next decade and beyond.
It will change the way we interact with our banks and the companies we seek services from for the better.
FinTech is a big deal which is why we’re going to cover what it is and why you should make some time for it in 2017.
So, What Exactly is FinTech?
FinTech does not have a set in stone definition that everyone uses but in layman’s terms, it’s the utilisation of new and existing technology to optimise how cash is used and managed at both a business and individual level.
This isn’t something which has just recently crept up from the corporate giants in Silicon Valley, this is something we’re already taking part in via things like Bitcoin and Contactless Credit Cards.
The reason FinTech is only recently beginning to stir up conversation in normal everyday discussion is because we’re currently riding the early wave towards the boom of financial technology.
Economists and software gurus alike have been speculating on the almost limitless applications of this postmodern technology. One day, according to some of these speculations, we could see ourselves borrowing money for a mortgage from multiple different everyday individuals through Blockchain technology, something that will, and is already, making global banks more and more obsolete.
Why is it that banks, and by extension you, should be wary of Blockchain financial technology?
Because, at its extreme, Blockchain could remove the need for banks and regulation altogether.
Blockchain Technology: The End for Banks?
Traditionally, the adding and subtracting of finances between individuals and businesses had to go through an intermediary who would ensure that ledgers are updated quickly, accurately, and safely.
This is the main function of the banks we all tend to use, however, Blockchain FinTech has constructed a way in which these ledgers are public (but not publically readable), updated instantly across all participating individuals, and are highly secure.
This is exactly the technology that underpins Bitcoin as a cryptocurrency and already demonstrates an early success of a digital currency which has no governmental or financial body’s rules imposed upon it.
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Due to the numerous advantages this brings over traditional financial management, it is almost a certainty that more cryptocurrencies of this nature will become more mainstream and perhaps eventually replace the classic roles of banks, credit card operators, insurance brokers, and more.
The Obstacles FinTech Must Overcome
For as many possibilities and efficiencies FinTech purports to bring to the average Joe as well as big business, there are concerns as to how this new technology is used and how it will be implemented.
#1 – Security
The #1 issue most people sympathise with is how secure is the technology managing our finances. Hackers and blackhat software developers are known for taking the time to break down the digital walls and exploit weaknesses to make a quick buck.
While we are assured that systems like Blockchain are fully encrypted and safe from tampering, how sure can we really be with how shielded out hard-earned money is?
#2 – Legal Challenges
As new technology evolves, the law has to play catch-up to make sure that individuals and businesses are not unfairly treated or exploited by systems they may not understand. It’s only now that we’re seeing the emergence of FinTech law firms which should help in driving home the message that the FinTech industry is not to be ignored.
#3 – Public Perception
One major problem with the FinTech industry right now is that not enough people know about or understand it yet! If you were to ask people what it is and how it might affect us in the future, we bet most people would not be able to provide you with an informed answer.
Another problem is that even those who have heard of FinTech are generally pretty sceptical – arguably with good reason. As long as this level of scepticism is quelled by informative and well-presented information aimed at the average member of the public, hopefully this will not be a lasting obstacle to further FinTech progress in the future.
What’s next for the Fintech Industry?
It is difficult to say where we’ll be with all the advances in financial technology over the next 10 or 20 years; all it takes is one corporate giant to form who can pave the way for us to take this tech to its full potential.
However, for now, we can appreciate early adopters like Monzo and Bitcoin.