The world is evolving at an unprecedented pace and at the heart of this evolution is the practical use of scientific knowledge: Technology. Technology is all around us, embedded into our everyday activities, and shows no signs of stopping as we head towards the end of decade. The world has fully embraced the advent of simplicity and personalization brought to us by technology and have started to explore its applications in various different industries. This leads us to our topic for today; Fintech. Financial Technology is everything that aims to streamline your financial needs and requirements, and with the surge in popularity of AI and Machine Learning, Fintech enthusiasts have found new avenues to explore.
Fintech is changing the finance industry for customers in ways that were unimaginable five years ago; and it certainly wouldn’t be a far stretch to say you probably wouldn’t need to visit a bank five years from today. Thanks to Fintech, you can make transactions online without having to access an ATM. You can use your mobile phone as a wallet and use it to buy things on the internet, but as amazing as this may sound, all of this is merely the tip of the iceberg when it comes to Fintech. Let’s explore this in a little more detail.
Future of Fintech
As we move towards a world driven by data, AI, and machine learning, we will see how these are leveraged to bring the most out of Fintech. Perhaps we could have financial advisers built on AI that can take care of a consumers financial investments without any human interaction involved? Perhaps machine learning can be used to revolutionize stock market trading? Or consumers can shift to Blockchains and completely change the landscape of finance as we know it? The key takeaway from this discourse is the overarching narrative of simplifying the processes for consumers that have been for long been at the mercy of the financial industry bent on exploiting them.
How Can Fintech Help Consumers
Let’s take a look at some of the ways consumers can leverage Fintech for themselves:
As we already mentioned, Fintech has helped consumers buy things online without having to physically make an exchange. Where people once had to go out and buy things with paper, they can now sit in the comfort of their homes and buy things with a click of a button.
With Fintech, consumers can buy things across continents without being geographically confined to their vicinity. This has resulted in less market monopoly, more competition, and consequently better products and services across the board.
As with all things that concern technology, personalization of products and services based on consumer behavior and actions can be done with the help of Fintech. Fintech helps businesses store data on their customers and consequently helps them target customers with offers that pertain to their interest.
Factors that will define the Landscape of Fintech
GDPR was the hottest topic of 2018 as companies found themselves on the wrong side of regulations and realized data isn’t free after all. With Data Protection and Privacy regulations in place, companies are forced to explicitly ask for permission before using any customer data or face the courts, as Google recently found when it was sent a $57 million fine by European authorities. Fintech relies on data as we mentioned, and in order to mould the concept around the customer, they need access to this data. Only time will tell how companies work their way around GDPR but as of this moment, how Fintech finds a way around this remains to be seen.
Machine learning can be used to find insights in the stock market as well forecast trends in the financial industry. The market applications of Machine Learning are immense but as of this point, its used primarily for predictive analysis. A lot of funding goes into the application of Machine Learning on a broader scale and it remains to be seen how Fintech makes the most of it. Machine Learning can be used to enhance financial security and reduce instances of financial fraud and theft. The present process of a rule based approach is substandard and fails to identify complex issues. With Machine Learning fully integrated in Fintech, instances of fraud can be identified in real-time and counter measures can be taken swiftly to mitigate loss.
Flip side of Fintech
As good as this sounds, the concept of Fintech is not all rainbows and sunshine. There are a number of ways in which Fintech could potentially be a trickier journey as the world moves to adopt it. Let’s have a look!
Ambiguity in Regulation
The Fintech industry is primarily a niche of startups and entrepreneurs not seasoned in financial ins and outs, and this could pose a problem when Fintech becomes mainstream. The lack of regulations and clarity around Fintech could pose it as a risk for consumers, with data theft and fraud being the least of their worries.
Fintech could create a landscape where people not accustomed to smartphones and technology might find themselves excluded from financial benefits and modes of payment. If Fintech succeeds in cementing its place in the market, sooner or later it will be the default mode of transactions and that could leave third-world countries and its residents with an uphill battle.
The discourse around Fintech and its pros and cons will continue way beyond its adoption among the masses, but the fact of the matter is that consumers around the world will end up benefiting from it in one way or another. How exactly that happens, remains to be seen!
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