The Future is FinTech
Similar to LA, where everyone has a script ready to pitch, in San Francisco, everyone has a new start-up idea at the ready. It’s no surprise, then, that most of the technology start-ups of our day, specifically FinTech start-ups, are headquartered in the Bay Area.
Since the financial crisis of 2007, the entire financial services industry has taken a hard hit – especially to its reputation. The nature of finance has radically changed since then. This is partially due to widespread skepticism of those in the finance industry, but also because of technology.
FinTech, or financial technology, is the technology and innovation that aims to compete with traditional financial methods in the delivery of financial services. It is an emerging industry that uses technology to improve activities in finance (Wikipedia).
While the East Coast, specifically New York City, is widely regarded as the financial capital of the world, many would argue that the West Coast, specifically San Francisco, has served as a similar beacon for technology. After the recession, both coasts and everyone in between wanted a different way to do financial services. And thus, the FinTech boom began.
4 Most Important FinTech Innovations
What historically had been left to the financial services sector has since become a critical vein in technology. Applying technology to finance, solving problems, and coming up with new and improved ways to serve people’s financial needs is at the heart of FinTech. Start-ups and established companies alike are all vying to serve the ever-growing economic needs of today’s consumers, who are wondering where and how to lend and store cash.
Here are four of the most important FinTech innovations:
1. Blockchain
The number of Blockchain ‘wallets’ has been growing since the creation of the Bitcoin virtual currency in 2009. There were 35 million Blockchain wallet users at the end of March 2019 (Statista). And if you can believe it, this is just the beginning. Worldwide spending on Blockchain solutions is expected to skyrocket from $1.5 billion to nearly $12 billion by 2022.
Blockchain technology is a critical part of most cryptocurrencies. It refers to a ‘block,’ or the record of owners, as well as the previous owners. Since this ‘chain’ of ownership is distributed globally, it is extremely difficult to alter the ownership records.
2. Digital Banking
Big data, coupled with algorithmic solutions and the technological preferences of the next generation of investors, has virtually transformed the banking world. Digital-only banking and other virtual financial intermediaries are taking market share from some of the giants in the financial services industry. But those same giants are also making some of their own FinTech investments. Goldman Sachs, for instance, debuted its proprietary software Marcus, and also made it open source. Like many other big investment banks, Sachs is validating FinTech as the next big thing to happen in finance.
3. Artificial Intelligence
Virtual banking ‘assistants’ and other chatbot functions have become all but a staple on today’s financial services websites. As big data becomes increasingly sophisticated, AI will surely follow suit – both in popularity and in progression. These integrated tools make it difficult for consumers to tell when they are dealing with an actual person or a robot. Efficiency and transparency go up, while bias and other stigmas go down. This makes transactions and customer service more universally accessible.
4. Cybersecurity
With all of these technological innovations inevitably comes risk. Which is why cybersecurity – that is, the systems that prevent cyber-attacks and data breaches – must be constantly improving. Staying ahead of those with malintent is a never-ending task.
As the world becomes increasingly dependent on technology, companies are completing more and more transactions electronically. And while that has been happening for the better part of 20 years, the popularity of electronic transactions has reached an all-time high, as everyday people are getting more comfortable with banking through their mobile devices and sending money over apps. An infinite amount of personal data is now stored online, making cybersecurity a crucial part of protecting electronic users and their private information.
Together, financial services and technology are entering into a whole new era.
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The Certificate Program of the Future
A fascinating, albeit predictable, gap has emerged given all that’s happening in FinTech – there are the finance people and there are the software people, but there aren’t a lot of the people who know both.
In response to this growing demand for FinTech experts, Saint Mary’s College of California has developed a FinTech certificate program. Converging on the cutting-edge of finance and technology, the program will blend the likes of mathematicians, computer scientists, finance professionals, and investor types to identify tools and models to value things like stocks, companies, and bonds, and apply those to real life situations. This hybrid graduate of the FinTech certificate program will be highly employable, competitive in the job market from coast to coast.
Thinking about a career in FinTech? Here are several of today’s employers looking for graduates with this financial technology knowledge base:
- Lending Club: peer-to-peer lending institution
- Wealthfront: automated financial management
- Robinhood: commission free stock trading app
- Betterment: a ‘robo-advisor’ and investment platform
Big, established businesses in the Bay Area are also experimenting with finance. The likes of Google, Facebook, and Amazon are developing their own applications for FinTech and exploring what can be acquired.
There is both fluidity and an established need for more FinTech experts, and the market is teeming with opportunity.
For more FinTech-related content and trends, check out Investopedia, the world’s leading source of financial content on the web.
Statistics provided by: https://carsurance.net/blog/fintech-statistics/
