To fully understand the question “What is Fintech”, it’s advisable to take a closer look at the driving forces brining about such disruptive change in financial services?
Major Fintech Driving Forces
- The Millennial or Generation Y, shaped by technology and the openness of social media, are now at a stage in their life where they need financial services products. The traditional model doesn’t always work for them and they are looking for alternatives that fit in with their thinking and lifestyle.
- Talented workers are starting out in this new sector or migrating to what they believe are more open and entrepreneurial technology companies. They are choosing to explore a career outside traditional financial services. A career in investment banking is no longer the ultimate dream of a college graduate.
- Post crisis, banks and other traditional financial services providers are reluctant to take on risk, and therefore won’t lend to risky borrowers. We all know the struggles many small and medium sized businesses and first time home buyers face in getting a loan through traditional channels – these borrowers explore alternative channels; and
- Technological innovation fuelled by a more connected society, availability of information and the ability to acquire and analyse big data. This is not only fuelling alternative finance start-ups, but helping traditional players deliver better customer insight and experience; and finally
- Especially in the UK, Government drive and a proactive and constructive regulator have helped to fuel alternative finance and financial technology (Fintech) innovation – making UK one of the most sought after destinations to start such a disruptive company.
Fintech is not only about high growth and the ability to generate huge profits. Start ups in this young and innovative sector, have a real opportunity to genuinely make a lasting contribution towards making financial services more transparent, efficient and most importantly, bring access to finance where such access was unavailable within traditional finance.